The Japanese government on Wednesday stuck to its view that the economy was recovering moderately, but flagged U.S. trade policies as key factors to watch as President Donald Trump's proposals on tariffs cast uncertainty over the economic outlook.

Japan has raised the issue of auto tariffs with the US after President Donald Trump threatened to impose a 25% levy on car imports, a move that would likely deliver a big blow to Japan’s economy.Tokyo is closely watching any potential impact stemming from higher levies,

President Donald Trump says he's planning to enact auto tariffs in the "neighborhood of 25%" to encourage companies to shift production from overseas.