Japan’s exports rose at a slower pace as the first salvo of Donald Trump’s tariff campaign started disrupting commerce with the introduction of a high levy on steel and aluminium.Exports measured by value gained 3.9% in March from a year earlier, led by cars and chip-making machinery, the Ministry of Finance reported Thursday. Exports missed the median estimate of a 4.4% increase. Imports gained 2%, led by medical goods, compared with the median estimate of a 3.1% gain.
Japan’s trade balance stayed in the black, with a surplus of ¥544.1 billion ($3.8 billion).
The trade surplus, with ongoing gains in exports, gives a boost to the Japanese economy while domestic consumption remains under pressure due to persistent inflation. But the outlook appears increasingly uncertain as Trump deepens his tariff campaign, prompting nations like China to retaliate.“There have also been reports of Jaguar and Audi stopping exports to the US,” said Takafumi Fujita, economist at Meiji Yasuda Research Institute. “Japanese companies may also curb shipments to the US going ahead.”Japan’s trade surplus with the US stood at ¥847 billion in March, increasing for three months in a row. Trump is aiming to erase the gap, using tariffs as a negotiation tool. In March, a 25% US levy on steel and aluminium imports took effect, followed by a duty at the same rate on cars in early April.
Also Read: Donald Trump says ‘big progress’ made in Japan talks on tariff dealJapan’s top trade representative, Ryosei Akazawa, kicked off formal tariff negotiations with US counterpart Scott Bessent and others on Wednesday and continued to seek a reprieve from the levies. Trump also joined the first meeting with the Japanese delegation after he put a three-month hold on a 24% across-the-board tariff on Japan. The US has still hit the Asian ally with a 10% baseline levy.Trump’s tariff campaign is hitting Washington’s allies and foes and risks causing major disruptions in the flow of goods across the world. Japan’s shipments to the US rose 3.1% by value in March, slowing from February’s 10.5% growth. Those to China, which has retaliated against the US measures, declined 4.8%, while exports to Europe, which has also struck back at Washington, fell 1.1%. Japan has indicated it won’t take retaliatory measures.“From April onwards, Japan’s car exports to the US are expected to decline, which could be a negative factor,” said Meiji Yasuda’s Fujita. “At the same time, the US government is bringing the exchange rate into trade negotiations. If the yen continues to strengthen, the value of imports will likely decrease, partially offsetting the negative effects.”The yen averaged 149.55 against the US dollar in March, 0.1% weaker than a year earlier, Japan’s finance ministry said. Bessent has indicated that the trade talks are likely to cover foreign exchange, but Akazawa said that currencies weren’t discussed in Wednesday’s talks. Trump has long criticised Japan for gaining a trade advantage with a weaker yen.The slowdown in exports likely reflected, in part, businesses’ cautious stance amid global uncertainties. That’s a worrisome sign for the world’s fourth-largest economy, where external demand has played a central role.Japan’s economy posted modest growth in the final quarter of 2024, though consumer spending remained stagnant. With mounting fragility in overseas markets, economists largely expect growth to decelerate significantly in the three months ending in March.Also Read: Explained | How Trump’s ‘up to 245%’ China tariffs affect different goods
Source link
