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Japan Times
21-05-2025
- Business
- Japan Times
Japan's exports slow as U.S. tariffs bite, risking a recession
Growth in Japan's exports slowed as the United States ramped up its tariff measures, highlighting the risks the country faces after its economy already contracted before the levies began hitting in earnest. Exports measured by value gained 2% in April from a year earlier, slowing from March's 4% as cars and steel dragged on shipments, the Finance Ministry reported Wednesday. Exports were just below the median analyst estimate, while imports fell 2.2% led by coal and crude oil. Japan's trade balance swung into a deficit of ¥115.8 billion ($797 million) after two months in the black. The slowdown in exports casts a cloud over Japan's economy at a juncture when authorities are trying to achieve a positive economic cycle fed by rising prices and wages. After last quarter's contraction, U.S. President Donald Trump's administration's tariff campaign puts Japan at risk of a technical recession if trade continues to drag on the economy when domestic consumption lacks momentum. Stay updated on the trade wars. Quality journalism is more crucial than ever. Help us get the story right. For a limited time, we're offering a discounted subscription plan. Unlimited access US$30 US$18 /mo FOREVER subscribe NOW "We are already seeing the impact of tariffs,' said Yuichi Kodama, economist at Meiji Yasuda Research Institute. "I think it will become more pronounced in the future, and downward pressure on trade will intensify.' By region, Japan's exports to the U.S. declined 1.8%, led by cars and construction machinery, while exports to China and Europe fell 0.6% and 5.2%, respectively. The yen averaged ¥147.7 against the dollar in April, 2.6% stronger than a year earlier, which weighed on the readings for yen-denominated exports and imports, according to the Finance Ministry. After launching his tariff campaign in March with 25% duties on steel and aluminum, Trump added a tax on car imports at the same rate from April, along with a baseline tax of 10% on all other Japanese goods that will rise to 24% this summer barring a trade deal. Car exports to the U.S., which accounted for about 29% of the total, declined 4.8% last month. Exports of steel, which made up 1% of the total, sank 29%. The hit to the car industry is likely to remain a major blow to Japan, with Toyota and Honda already projecting profit hits in the billions of dollars. That bodes ill for their ability to keep raising wages at home at a time when the Bank of Japan sees strong wage momentum as a key factor that would allow it to roll back its monetary stimulus. The yen, which has risen 9.1% against the dollar from the start of the year, is a key factor for how trade impacts Japan's economy. A stronger currency cools inflation via cheaper imports, while cutting the value of exporters' overseas earnings brought back onshore. Finance Minister Katsunobu Kato plans to discuss foreign exchange with U.S. Treasury Secretary Scott Bessent during the Group of Seven meetings in Canada this week. In all, Japan's trade surplus with the U.S. stood at ¥780.6 billion in April, narrowing from ¥846.9 billion in March. The persistent gap has made Japan a target in Trump's attempts to rebalance U.S. trade, but Prime Minister Shigeru Ishiba has signaled that Japan is not in a rush to make a deal if it means that its national interests may be hurt. U.S. Commerce Secretary Howard Lutnick has also said trade talks with Japan will take time. Following staff-level talks this week, Japan's top trade negotiator Ryosei Akazawa is set to fly to Washington again for discussions at the end of the week, according to local media. Ishiba continues to seek an exemption from all additional U.S. tariffs and has said he won't sacrifice Japan's agricultural sector in order to protect its auto industry. Tariffs are set to be a key topic ahead a national election early this summer, poised to take place after the so-called reciprocal tariffs are set to go back to 24% in early July. "It would be ideal if domestic demand could offset the decline in external demand, but that would be difficult because real wages continue to fall, keeping a lid on consumption,' said Meiji Yasuda's Kodama. "There is a possibility that the economy may fall into a technical recession.'
Yahoo
19-03-2025
- Business
- Yahoo
Japan's Exports Rise at Faster Clip Before Trump Tariffs Hit
(Bloomberg) -- Japan's exports rose at a faster pace as businesses increased orders ahead of the rollout of higher tariffs in the US. How Britain's Most Bike-Friendly New Town Got Built The Dark Prophet of Car-Clogged Cities Washington, DC, Region Braces for 'Devastating' Cuts from Congress NYC Plans for Flood Protection Without Federal Funds A Malibu Model for Residents on the Fire Frontlines Exports measured by value gained 11.4% in February from a year earlier, the Ministry of Finance reported Wednesday. Exports slightly missed the median estimate of a 12.6% increase. Imports fell 0.7%, compared with the median estimate of a 0.8% gain. Japan's trade balance switched back into the black, with a surplus of ¥584.5 billion ($3.9 billion). Trade helped Japan's economy grow in the last quarter of 2024 as net exports rose, and shipments abroad have advanced in the first two months of this year. Part of that bump reflected efforts to frontload exports to get ahead of new tariffs in the US. 'I think that some of the growth in exports may be due to a rush of orders before the Trump tariffs came,' said Yuichi Kodama, economist at Meiji Yasuda Research Institute. 'But it's not clear to what extent this was the case. It's worth noting that exports to the US fell in terms of volume.' By region, shipments to the US rose 10.5% by value and slipped by 3.3% in terms of volume. Those to China increased 14.1%, likely boosted by the Lunar New Year effect, while exports to Europe fell 7.7%. Global trade flows now face potential major disruptions as US President Donald Trump continues to escalate his tariff campaign, targeting nations including Canada and Mexico, where Japanese carmakers have major manufacturing bases. The renewed trade war between Washington and Beijing also risks having a ripple effect on Japan, which counts on the two nations as its biggest trading partners. The OECD Monday cut its world growth forecast to 3.1% for 2025 to account for turbulence weighing on global commerce. 'I don't think overseas demand is that strong,' Kodama said. 'Exports are growing in value terms mainly due to the impact of exchange rates, but growth in volume is slow, so it remains to be seen whether this strength will continue.' The yen averaged 154.61 per dollar in February, 4.3% weaker than a year earlier, the Finance Ministry said. Japan has so far failed to get an exemption from direct levies from the Trump administration, despite a seemingly positive meeting between the two nations' leaders in February. Trade Minister Yoji Muto's pleas to senior officials in Washington this month apparently went unheeded. Fresh tariffs on steel and aluminum started hitting the Asian nation last week, and its manufacturers face the prospect of reciprocal tariffs on a variety of sectors plus a 25% auto levy set to start in early April. To lower the impact from any tariffs imposed by Trump, Japanese companies are already stockpiling goods in the US, according to a survey by Bloomberg News. Cars, semiconductor manufacturing equipment and chips led the advance in exports in February, while declining imports of crude oil and coal were among components weighing on imports. Japan's trade surplus with America was ¥918.8 billion in February, up 29% versus a year earlier. Auto shipments to the US rose almost 14%. Trump has long criticized the US trade deficit with Japan, and the president recently accused Japan and China of gaining an unfair advantage through foreign exchange policy, which Japan has denied. The US has also historically criticized the road safety standards in Japan as a non-tariff barrier that restricts US automakers' exports to Japan. (Updates with economist's comments, more details from report) Tesla's Gamble on MAGA Customers Won't Work The Real Reason Trump Is Pushing 'Buy American' The Future of Higher Ed Is in Austin Snap CEO Evan Spiegel Bets Meta Can't Copy High-Tech Glasses A US Drone Maker Tries to Take Back the Country's Skies ©2025 Bloomberg L.P. Sign in to access your portfolio
