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% in May from a year earlier led by cars, steel and mineral fuel, the Ministry of Finance reported Wednesday. That compared with the median analyst estimate of a 3.7% decline. Imports declined 7.7%, 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 ($4.4 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% tariff on imports of cars and auto parts, along with a baseline tax of 10% on all other Japanese goods. He also doubled a levy on steel and aluminum to 50% in early June.
The levies will stay in place for now as 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% across-the-board tariff is set to revert back to 24% on July 9, in line with announcements made in April.
Car exports to the US declined 24.7% in May. Overall exports to the US fell 11.1% while imports slumped 13.5%, leaving Japan with a trade surplus of ¥451.7 billion. The gap, which narrowed for the first time in five months, has made Japan a target in Trump’s attempts to rebalance US trade with his tariff measures.
Meanwhile, Japan’s exports to China fell 8.8% and those to Europe increased 4.9%.
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AloJapan.com