TOKYO — Japan’s economy is faltering, South Korea’s currency is plunging and both countries have been caught in the middle of U.S. efforts to isolate Chinese tech firm Huawei.

As President Trump arrives in Japan this weekend for a four-day state visit, the fallout from his trade war with China is reverberating around the region.

In Japan there is considerable support for Trump’s tough line on China, but that’s mixed with concern about the effect the trade war and China’s economic slowdown is already having on Japanese exports and factory output. 

There are also concerns that Japan will be next in the president’s trade crosshairs, with Trump impatient for a deal to open its market further to U.S. agriculture and threatening to impose steep tariffs on imported cars on national security grounds.

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In Seoul, the won fell sharply this week and has now depreciated by nearly 5 percent against the dollar in a month, pushed down in large part by the slowdown in China, the fall in its currency, the renminbi, and the impact of the trade war.

Both countries find themselves caught in the middle of the Huawei dispute: Japan effectively banned the company from competing for government contracts in December, but the private sector’s ties to the company are much harder to unravel. 

The Sankei newspaper reported this week that 100 Japanese companies supplied Huawei with parts worth $6.6 billion last year while some of the country’s cutting-edge tech firms also collaborate with the Chinese company on development projects.

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Shares in Japanese electronic component makers Taiyo Yuden and TDK have fallen more than 20 percent this month.

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In a news conference, the chairman of the Keidanren business federation said Japan would have to change its supply chain if the ban on trade with Huawei gets applied to firms here. “So as not to step on the tail of the U.S. tiger, we must take measures,” Hiroaki Nakanishi warned Monday, according to local news media.

In Seoul, the Chosun Ilbo newspaper reported this week that the U.S. government is lobbying South Korea not to use Huawei products.

While the U.S. blacklisting of Huawei has helped pushed up shares this week in its competitors in the smartphone market, such as Samsung and LG Electronics, it hit shares in the company’s suppliers and sparked wider concerns in a country that depends on China for nearly a quarter of its exports.

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“Lacking a governmental strategy, South Korea gets dragged into a war between China and the United States,” Chosun Ilbo wrote in an editorial Friday. “Strategizing on security with the United States and the economy with China will not work anymore, as the two have started an explicit fight for supremacy.”

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The broader trade war is also a concern in Japan. A survey of more than 1,000 companies by Mizuho Research Institute, found that more than half are concerned about its effect.

Many are moving to dual-bases for the Asian operations — not pulling out of China but limiting investment there while expanding operations elsewhere in Southeast Asia, Mizuho found.

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The bigger question is whether Japan will be sucked into a trade war of its own with the United States.

Prime Minister Shinzo Abe has been carefully courting Trump to prevent that from happening, and on his April visit to Washington boasted that Japanese companies have invested $23 billion to create 43,000 jobs in the United States since Trump took office.

Still, Japan finds its auto industry threatened with 25 percent tariffs, although Trump recently declared he would delay imposing them for 180 days to allow room for negotiations on restricting import volumes.

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The threat was greeted with an unusually sharp rebuke from Akio Toyoda, the president of Toyota Motors and chairman of the Japan Automobile Manufacturers Association, who said he was “deeply saddened.”

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“We are dismayed to hear a message suggesting our longtime contributions of investment and employment in the United States are not welcomed,” he said in a statement.

Japan’s car companies, keen to avoid trade frictions, have long operated factories in the United States, and Toyota alone has promised to invest nearly $13 billion there between 2017 and 2021.

But it is not only cars that are buzzing in Trump’s trade bonnet. Japan’s decision to push ahead with the Trans-Pacific Partnership, an 11-nation trade deal, and also its success in agreeing to a separate deal with the European Union, has resulted in promises to cut agricultural tariffs for a whole swath of countries — just not the United States. 

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Because Trump withdrew from the TPP, the United States is not one of them, and U.S. porkwheat and barley exporters are already reported to be under pressure.

Trump wants Japan to agree to swift agriculture tariff cuts. 

Japan says any deal has to be reciprocal and include corresponding concessions by the United States, to comply with World Trade Organization rules and have a chance of ratification by Japan’s parliament. 

Tatsuhiko Yoshizaki, a market economist at Sojitz Research, says the TPP and Japan-E.U. trade pacts have strengthened Japan’s hand in trade talks with the United States.

“When the latest round of talks began, Japan did feel under pressure, as it’s beholden to U.S.-Japan security relations,” he said. “But thinking hard, the situation is different now. It is the United States that is hard-pressed to make a deal without delay. Time is on Japan’s side.”

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Masahiko Hosokawa, a professor at Chubu University and former Japanese trade negotiator in the 1980s and 1990s, isn’t worried about a trade war. He says Abe’s strategy of building a strong personal relationship with Trump is paying off, and notes that there isn’t interest in Washington to go after Japan, the country’s most important Asian ally.

“Both Republicans and Democrats are hoping to see President Trump be tough on China, and the tougher he gets, the more votes he gets,” he said.

Hajime Takata, executive economist at Mizuho Research Institute, says Japan’s trade deficit in goods, at $68 billion in 2017, was much smaller than China’s $419 billion and also a much smaller share of the total than it was three decades ago.

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“At a time when countries are increasingly divided globally, Japan could serve as a bridge in the divided world,” he said.

Min Joo Kim in Seoul contributed to this report.

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