In a recent announcement, Japanโs Finance Ministry revealed that the country ended the fiscal year from March to April with a global trade deficit, marking the fourth consecutive year of such deficits. Despite this, Japan achieved a notable trade surplus with the United States. The global trade deficit amounted to approximately 5.2 trillion yen, equating to about $37 billion. However, the surplus with the U.S. expanded significantly, reaching up to 9 trillion yen, or roughly $63 billion.
The issue of exports to the U.S. remains a contentious point, with attention focused on U.S. President Donald Trumpโs proposals concerning tariffs. Japanese delegates are actively engaging in Washington to negotiate against the proposed increases in U.S. tariffs. As a longstanding ally of the United States and a significant investor employing numerous Americans, Japan holds a pivotal role in these discussions.
Earlier in April, Trump announced intentions to impose a 24% tariff on imports from Japan amidst broader tariff increases on several countries. Following adverse reactions in financial markets, a temporary 90-day hold was placed on these tariffs. Nevertheless, tariffs on Chinese imports were elevated, reaching as high as 145%.
Currently, Japan continues to confront a 10% baseline tariff, alongside a 25% tariff on imports of cars, auto parts, steel, and aluminum. These measures, many of which have been implemented recently, pose substantial challenges for Prime Minister Shigeru Ishibaโs administration.
Speculation arises from some economic analysts suggesting Japan might concede by importing more U.S. rice. Rice, deeply ingrained in Japanโs cultural and culinary identity, has traditionally been a protected sector, but recent shortages have escalated its prices.
Throughout the fiscal year, Japanโs annual exports rose by 5.9% from the previous year, driven by strong sales in sectors such as computer chips and vehicles. Imports, however, increased by 4.7%, heightened by a weaker yen, which inflated import costs. The influx of foreign tourists to Japan also contributed positively to rising exports, as their spending is categorized as such.
In March alone, Japan saw a trade surplus of 544 billion yen, approximately $4 billion. Export figures showed nearly a 4% increase from the prior year, marking the sixth consecutive month of growth, though at a slower pace than February. Exports destined for the U.S. rose by 3%, while those to other Asian countries grew by 5.5%. Conversely, exports to China declined, whereas shipments to Hong Kong, Taiwan, and South Korea experienced a notable rise.
According to economist Min Joo Kang from ING, the shifting patterns in exports might be attributed to rerouting within Asia to circumvent potential tariff conflicts with the U.S.