On Wednesday (May 21), the Japanese government released the latest data revealing that the growth of exports in April continued to slow. Unexpectedly, Japan recorded a significant trade deficit for the month. Analysts believe that the stringent tariff policies implemented by U.S. President Donald Trump have directly impacted Japanese exports, being a key factor in the current situation.
According to the Japanese Ministry of Finance, exports in April increased by only 2% year-on-year, which is below the market's general expectation of 2.5%. This was the weakest performance since October 2023 and marked the worst level since exports shrank 1.7% in September 2023. Meanwhile, imports fell by 2.2% year-on-year, which was less than the originally forecasted drop of 4.5%. However, the "resilience" in imports did not result in a surplus. Instead, due to weak exports, Japan recorded a trade deficit of 115.8 billion yen in April, which was far beyond the market's estimated surplus of 227.1 billion yen.
Experts have pointed out that the relatively strong imports may be linked to a boost in consumer demand driven by spring wage increases, but this has been insufficient to offset the impact of declining exports. The data shows that Japan's exports to the United States fell by 1.8% year-on-year, and exports to China also decreased by 0.6%.
From a macroeconomic perspective, Japan's economic weakness is gradually becoming evident. Preliminary official statistics indicate that Japan's real GDP contracted by 0.7% on an annualized basis in the first quarter of this year, primarily due to weakening private consumption and lackluster foreign demand growth.
One of the most significant factors affecting exports is undoubtedly the high tariffs imposed by the Trump administration. Currently, the U.S. imposes tariffs as high as 25% on cars, steel, and aluminum from Japan, along with a uniform basic tariff of 10% on most trading partners. Although a temporary 90-day deferral for "reciprocal tariffs" on over 180 countries, including Japan, was announced in early April, key industry tariffs such as those on automobiles remain unchanged.
Japan's chief trade negotiator, Ryozo Akimoto, stated this week that Japan explicitly demanded the removal of tariffs, particularly the high tariffs on automobiles and parts, during trade talks with the U.S. He emphasized that if the tariff issue is not resolved, Japan will find it challenging to reach a substantively meaningful agreement with the U.S.
The automobile industry is a core pillar of Japanese exports. According to customs statistics, in 2024, automobiles will account for 28.3% of Japan's exports to the U.S. The heavy tariff burden not only undermines export competitiveness but also drags down overall economic performance.
Furthermore, the strengthening of the yen against the dollar in April has also weakened overseas earnings for Japanese exporters, exacerbating the pressure on declining exports. With multiple unfavorable factors accumulating, there is still significant uncertainty regarding whether Japanese exports can rebound in the short term.
