Bank of Japan Governor Kuroda has warned that the US-China trade war can spillover and have adverse effects on the Japanese economy. Policymakers in Japan are concerned about the prolonged and escalating trade tensions between two of the world’s largest economies.

Kuroda stated to the Parliament that continuing trade tensions between US and China could disrupt market sentiment and market developments in Japan as well. Given that Japan is an export-oriented economy, tariff hikes between the world leaders could affect Japan’s exports and economic growth too.

For now, Japan is confident about going ahead with the proposed sales tax hike from 8% to 10% in October. Chief Cabinet Secretary Yoshihide Suga has also confirmed that the government will plan ahead to mitigate any risks caused due to the sales tax hike.