Japan’s early May exports drop as tariff war disrupts commerce
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Japan’s trade balance was in the red, with a deficit of 1.1 trillion yen (S$9.8 billion).
PHOTO: BLOOMBERG
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Japan’s exports fell in the first 20 days of May as the Trump administration’s sweeping tariffs continued to disrupt trade.
Exports measured by value dropped 3 per cent from the same period a year earlier, the Finance Ministry reported on June 6. This decline follows a 2.3 per cent gain in the first 20 days of April, and a 2 per cent rise for all of that month. Growth in exports has averaged 6.2 per cent over the year through April.
Japan’s trade balance was in the red, with a deficit of 1.1 trillion yen (S$9.8 billion). The 20-day data does not provide details such as a breakdown of exports to specific countries or regions. The figures for the full month of May are set to be released on June 18.
Cars, steel, chips and other electronic components led the exports lower while coal, non-ferrous metal and crude oil drove down the imports, according to the Finance Ministry.
The yen averaged 143.02 against the US dollar during the period in May, 8 per cent stronger than the same period a year earlier, which weighed on the readings for yen-denominated exports and imports, according to the ministry.
The trajectory for trade will be a key factor determining whether Japan’s economy enters a technical recession in the current quarter after weak external demand and sluggish private consumption resulted in a contraction in the previous period. In April, exports to the US fell, led by a drop in cars.
As with other nations, Japan faces a 25 per cent tariff on cars and their parts and a minimum 10 per cent tariff on other goods across the board.
US President Donald Trump doubled a tax on steel and aluminium to 50 per cent in early June, and the 10 per cent tariff is set to revert to 24 per cent in early July, barring a deal.
On May 12, the US and China, Japan’s two biggest trading partners, announced that they had reached a temporary agreement on reducing tariffs. But tensions have flared since then, with Mr Trump complaining earlier this week that Chinese leader Xi Jinping is “hard to make a deal with”.
Japan and the US are continuing to negotiate on the tariffs as they eye possibly announcing a deal on the sidelines of the Group of Seven leaders’ gathering in Canada later in June.
Japan’s top trade negotiator, Mr Ryosei Akazawa, said upon arrival in Washington on June 5 that he would continue to press for a removal of all tariffs. BLOOMBERG
