Mizuho director Kobayashi says companies should not overreact to Trump's tariff threats

By Shashwat Awasthi and Carolina Mandl

NEW YORK (Reuters) -Izumi Kobayashi, director at Japan's Mizuho Financial, Omron, and ANA, said on Tuesday that companies should not overreact to President-elect Donald Trump's threats of imposing tariffs on Chinese goods.

At an interview at the Reuters NEXT conference in New York, she said that it would be difficult to withdraw from China given its mammoth size.

Kobayashi said that industrial conglomerate Omron has not yet taken any action to prepare for potential sanctions the incoming Trump administration may impose, but there are some ongoing discussions about it.

One potential measure could be to separate the Chinese unit from the rest, but that would bring some challenges in terms of managing that business.

Japan has been paying close attention to potential sanctions on China. Last year, Japan's financial regulator sounded out top domestic banks about China risks and whether they had contingency plans in place if Sino-Western tensions escalated, as they are heavily exposed to the country.

A major risk for Japanese banks would involve U.S. sanctions on China, hobbling their ability to do business there similar to the bans on Russia dealings after the invasion of Ukraine.

JAPANESE COMPANIES

On the board of directors of three Japanese companies, Kobayashi commented on big deals involving the country's companies and the resistance they have faced.

Nippon Steel, Japan's biggest steel maker, plans to pay $15 billion to acquired U.S. Steel, but is awaiting reviews from the Committee on Foreign Investment in the United States (CFIUS) and clearance from the U.S. Department of Justice (DOJ) under antitrust laws.

It has faced stiff resistance from politicians and labour group United Steelworkers (USW), with Republican President-elect Donald Trump opposing the deal. "I am totally against the once great and powerful U.S. Steel being bought by a foreign company," he said last week.

Kobayashi said the deal makes sense from the point of view of business, but it could be more sensitive from a political stand. "The steel industry is a key industry in each country," she said, adding that the ownership of a key company is "a serious issue."

Recently, Japanese retail giant Seven & I Holdings has been classified as "core" to national security, raising questions as to whether it is a defensive maneuver by the owner of 7-Eleven convenience stores to avoid a $38.5 billion buyout offer from Canada's Alimentation Couche-Tard.

The executive said the role Seven & I plays in Japan matters. "It's a private company, but in some part it takes a part of the public service as well," she said, mentioning the banking services it provides and how it could help in case of a natural disaster.

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(Reporting by Carolina Mandl and Shashwat Awasthi, in New York; Editing by Franklin Paul and Nick Zieminski)