Japan sank into a trade deficit of 2.2 trillion yen (€13 billion) for the first six months of this year, according to government data released Thursday, as exports were hit by President Donald Trump’s tariffs.
In June, Japan’s exports slipped 0.5% from a year earlier, following a 1.7% drop in May.
Japan’s exports to the US declined by 11% in June, with auto exports plunging 26.7%. (The US slapped car imports with a 25% tariff in April.)
Shipments to China decreased by nearly 5%. Exports to Mexico, a major auto assembly hub for North America for Japanese automakers, fell nearly 20%.
Trump has postponed implementing that higher import duty until 1 August, to allow time for negotiations, but so far no deal has been reached.
Japan exports in June totalled nearly 9.2 trillion yen (€53 billion), in the second straight month of declines. As imports rose slightly by 0.2%, the trade surplus came in at 153 billion yen (just over €890 million), following a trade deficit in May amounting to 637.6 billion yen, or €3.7bn.
In the first half of the year, Japan’s exports totalled 53.4 trillion yen (€310bn), up 3.6%, while imports rose 1.3% to 55.6 trillion yen (€320bn).
Japan and the US have been holding trade talks, with Japanese officials stressing that Japan is a key US ally. Customs data shows that, based on value, nearly one-fifth of all exports were heading to the US in 2024, making a trade deal crucial for the country’s economy.
Trump has focused on rice, a sector traditionally protected from foreign competition for the sake of Japan’s food security. Japan imports more than 300,000 tons of rice a year from the US, according to various data, although some of that is used for animal feed.
Japan will hold an election for the Upper House of Parliament on Sunday.
Given falling public support for Prime Minister Shigeru Ishiba’s administration, the conservative and pro-business ruling Liberal Democratic Party could lose its majority unless it gains another coalition partner.
Japan’s economy contracted in the first quarter of this year compared to the previous quarter, partly due to slowing exports. Following the latest export figures, concerns are mounting that the export-dependent Japanese economy is going to contract again in the second quarter, and the country will land in a recession.
