Japan's exports fall more than expected in July on US tariff pressures
The outcome follows unexpectedly strong growth in gross domestic product (GDP) in the April-June quarter, separate data showed last week, fuelled by surprisingly resilient exports and capital expenditure.
Total exports from the world's fourth-largest economy dropped 2.6 per cent year-on-year in July in value terms, more than a median market forecast for a 2.1 per cent decrease and following a 0.5 per cent drop in June.
Exports to the United States in July fell 10.1 per cent from a year earlier, while those to China were down 3.5 per cent, the data showed.
Imports in July dropped 7.5 per cent from a year earlier, compared with market forecasts for a 10.4 per cent fall.
As a result, Japan ran a deficit of 117.5 billion yen (US$795.4 million) in July, compared with a forecast of a 196.2 billion yen surplus.
The United States imposed 25 per cent tariffs on automobiles and auto parts in April and threatened 25 per cent levies on most of Japan's other goods. It later struck a trade deal on Jul 23 that lowered tariffs to 15 per cent in exchange for a US-bound US$550 billion Japanese investment package.
The agreed tariff rate on automobiles, Japan's largest export sector, is still far higher than the original 2.5 per cent, exerting pressure on major automakers and parts suppliers.
Japanese automakers have mostly absorbed additional tariff costs by cutting prices to protect shipment volumes. But economists expect them to eventually pass on costs to US consumers, which could hamper their sales in the US market.
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