TOKYO: Japan’s exports rose at a faster clip in January as businesses ramped up orders just as US president Donald Trump unleashes a barrage of protectionist policies set to take effect in the coming months.
Exports measured by value increased 7.2% from a year earlier led by shipments of cars and ships, the Finance Ministry reported yesterday.
Exports rose broadly in line with expectations.
Imports surged 16.7% led by communication machinery and computers, and beat the median estimate.
Japan’s trade balance swung back into the red, with a deficit of 2.76 trillion yen, the largest in two years.
By region, shipments to the United States rose 8.1%, while those to China fell 6.2%.
Exports to Europe declined 15.1%.
The global trade outlook is increasingly uncertain.
Trump said on Tuesday he would likely impose tariffs on automobile, semiconductor and pharmaceutical imports of around 25%, with an announcement coming as soon as April 2.
Meanwhile, for drugs and chips, Trump suggested that the levies will become significantly higher than 25% over the course of a year.
“I think there was a rush of demand for exports. Shipments clearly grew in the first half of the month before the Trump administration began,” said Norinchukin Research Institute economist Takeshi Minami.
“I don’t think this kind of growth matches demand in the United States, so it’s quite possible that exports will decline down the road.”
Trump’s fresh tariffs against China already prompted retaliatory levies from Beijing, and the president has also threatened a range of measures against other nations, including 25% levies on steel and aluminum imports that will take effect in March and reciprocal tariffs on numerous trading partners.
Japan, whose two biggest trading partners are the United States and China, is bracing for the potential impact and trying to minimise fallout.
Tokyo has asked Trump to exclude it from the steel and aluminum steps as well as the reciprocal duties while it also seeks details regarding his other levy plans.
Exports to China declined for a second month as the lunar new year holidays came in January this year, as opposed to last year when they were in February.
Going forward, the renewed trade war between Beijing and Washington is likely to influence Japan’s trade as well.
Japan’s longstanding trade surplus with the United States continues to risk the ire of Trump, who favours using levies to close trade gaps with other nations.
Furthermore, Japan’s trade surplus with the United States was 477 billion yen in January.
Auto exports to the United States surged 21.8% in the month.
Car exports are a key component for Japan’s economy, especially at a time when inflation seems to be keeping a lid on domestic consumption.
Japan could suffer both from the direct hit of tariffs on its shipments as well as an indirect hit from duties rising on imports originating in Mexico and Canada, which both host factories owned by Japanese carmakers.
The tariff threats continue to mount even after Prime Minister Shigeru Ishiba promised during his first summit with Trump earlier this month that Japanese firms would boost investment into the United States.
Data from the Japan Automobile Manufacturers Association show that in 2023, Japanese carmakers made 3.3 million cars in the United States, more than twice the 1.5 million cars they exported to the country.
The yen averaged 157.20 per dollar in January, 9.2% weaker than a year earlier, the Finance Ministry said.
In the past, Trump criticised the weaker yen for fueling the US trade deficit with Japan. — Bloomberg