Japan's exports fall as US tariffs stoke recession risks
Car exports to the US tumbled 24.7 per cent in May. Overall exports to the US fell 11.1 per cent. PHOTO: REUTERS
TOKYO – Japan's exports fell for the first time in eight months as the US tariff campaign weighed on global trade, raising the risk of a technical recession after the economy contracted at the start of the year.
Exports measured by value dropped 1.7 per cent in May from a year earlier led by cars, steel and mineral fuel, the Ministry of Finance reported on June 18. That compared with the median analyst estimate of a 3.7 per cent decline. Imports dropped 7.7 per cent, led by crude oil and coal.
Japan's trade balance stayed in the red for a second month, widening to a deficit of 637.6 billion yen (S$5.6 billion).
The drop in exports and the widening trade deficit add to concerns that Japan's economy could shrink again in the second quarter, ushering in a technical recession. Domestic consumption has remained weak as inflation continues to outpace wage hikes.
US President Donald Trump has imposed a 25 per cent tariff on imports of cars and auto parts, along with a baseline tax of 10 per cent on all other Japanese goods. He also doubled a levy on steel and aluminum to 50 per cent in early June.
The levies will stay in place for now as Mr Trump and Japanese Prime Minister Shigeru Ishiba failed to reach a deal on the sidelines of the Group of Seven leaders' summit after two months of bilateral negotiations. The 10 per cent across-the-board tariff is set to revert back to 24 per cent on July 9, in line with announcements made in April.
Car exports to the United States tumbled 24.7 per cent in May. Overall exports to the US fell 11.1 per cent while imports slumped 13.5 per cent, leaving Japan with a trade surplus of 451.7 billion yen.
The gap, which narrowed for the first time in five months, has made Japan a target in Mr Trump's attempts to rebalance US trade with his tariff measures.
Meanwhile, Japan's exports to China fell 8.8 per cent and those to Europe increased 4.9 per cent. Bloomberg
Join ST's Telegram channel and get the latest breaking news delivered to you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNA
35 minutes ago
- CNA
Dollar wobbles as investors monitor Israel-Iran conflict ahead of Fed decision
The U.S. dollar wavered against most major currencies on Wednesday, as fighting between Israel and Iran left investors nervous ahead of a keenly awaited Federal Reserve decision on interest rates later in the day. Israel has pounded Iran over the past six days to halt its nuclear activity and has asserted the need for a change of government in the Islamic Republic. The U.S. military is also bolstering its presence in the region, Reuters reported, sparking speculation of U.S. intervention that investors fear could widen the conflict in an area replete with energy resources, supply chains and infrastructure. Against this backdrop, the dollar has found support as a safe haven, firming roughly 1 per cent against the Japanese yen, Swiss franc and euro since Thursday and helping it to shave declines from earlier in the year. The greenback had lost more than 8 per cent so far this year due to eroding confidence in the U.S. economy due to President Donald Trump's trade policies. "The dollar is still a safe haven because of its depth and liquidity, so, yes the structural forces are diluting the dollar safe-haven activities, but they're not eroding them completely," said currency strategist Rodrigo Catril at National Australia Bank. "But in a scenario of big risk aversion, the dollar will still gain support but maybe not to the same extent it has managed in the past." The dollar wavered between small gains and losses against the yen and had touched a one-week top in early Asia trading hours. The greenback was last down 0.2 per cent and fetched 144.90 yen. The Swiss franc was flat at 0.816 per dollar and the euro edged up 0.2 per cent at $1.150. A broader index tracking the greenback against six other currencies slipped 0.1 per cent after a 0.6 per cent jump in the previous trading session. An increase in crude oil prices to about $75 a barrel has also weighed on the euro and yen given the European Union and Japan are primarily net crude importers as opposed to the U.S., which is a net exporter. Investors' next point of focus is the Fed, which is set to decide whether to change its interest rates. Recent data showed the U.S. economy was slowing as Trump's erratic policymaking style increased uncertainty. Higher crude prices due to conflict in the Middle East are also complicating the Fed's task. Traders expect the central bank to leave borrowing costs unchanged and will be keen to hear the Fed's outlook for interest rates this year and the overall health of the economy. "The labour market is definitely their key attention," said Thomas Poullaouec, head of multi-asset solutions APAC at T. Rowe Price. "If we see an acceleration of people being fired, that would be (reflected in) weekly jobless claims and that could trigger the threat to reassess. But I would still expect inflation to be more on their radar and the labour market to remain resilient in the short term." A weekly report on jobless claims is expected later in the day out of the U.S., while on the policy front, central bank decisions are also due from Switzerland, Norway and Sweden later in the week. In Britain, sterling firmed 0.26 per cent to $1.346 as markets assessed data that showed inflation cooled as expected to an annual rate of 3.4 per cent in May, ahead of the Bank of England's policy verdict on Thursday. An area of frustration for investors was a Group of Seven meeting in Canada yielding little on the tariff front, ahead of Trump's early July deadline for additional levies.
CNA
an hour ago
- CNA
India's Modi maintains there was no US mediation in ceasefire with Pakistan
NEW DELHI: India's Prime Minister Narendra Modi maintained in a conversation with United States President Donald Trump late on Tuesday (Jun 17) that a ceasefire between India and Pakistan after a four-day conflict in May was achieved through talks between the two militaries and not US mediation, India's senior-most diplomat said. Trump had said last month that the nuclear-armed South Asian neighbours agreed to a ceasefire after talks mediated by the US and that the hostilities ended after he urged the countries to focus on trade instead of war. "PM Modi told President Trump clearly that during this period, there was no talk at any stage on subjects like India-US trade deal or US mediation between India and Pakistan," Indian Foreign Secretary Vikram Misri said in a press statement. "Talks for ceasing military action happened directly between India and Pakistan through existing military channels, and on the insistence of Pakistan.
Straits Times
an hour ago
- Straits Times
India's Modi maintains there was no US mediation in ceasefire with Pakistan
FILE PHOTO: U.S. President Donald Trump and Indian Prime Minister Narendra Modi shake hands as they attend a joint press conference at the White House in Washington, D.C., U.S., February 13, 2025. REUTERS/Kevin Lamarque/File Photo India's Modi maintains there was no US mediation in ceasefire with Pakistan NEW DELHI - India's Prime Minister Narendra Modi maintained in a conversation with U.S. President Donald Trump late on Tuesday that a ceasefire between India and Pakistan after a four-day conflict in May was achieved through talks between the two militaries and not U.S. mediation, India's senior-most diplomat said Trump had said last month that the nuclear-armed South Asian neighbours agreed to a ceasefire after talks mediated by the U.S., and that the hostilities ended after he urged the countries to focus on trade instead of war. "PM Modi told President Trump clearly that during this period, there was no talk at any stage on subjects like India-U.S. trade deal or U.S. mediation between India and Pakistan," Indian Foreign Secretary Vikram Misri said in a press statement. "Talks for ceasing military action happened directly between India and Pakistan through existing military channels, and on the insistence of Pakistan. Prime Minister Modi emphasised that India has not accepted mediation in the past and will never do," he said. Misri said the two leaders spoke over the phone at the insistence of Trump on the sidelines of the G7 summit in Canada which Modi attended as a guest. The call lasted 35 minutes. The White House did not immediately respond to a request for comment about the Modi-Trump call. Pakistan has previously said that the ceasefire happened after its military returned a call the Indian military had initiated on May 7. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
