TOKYO • Japan's exports to the United States fell for the first time in 17 months and Japanese business sentiment soured amid worries about US President Donald Trump's protectionist trade policies.
Exports to the US dipped 0.9 per cent last month from the same period a year ago on waning shipments of cars and semiconductor-manufacturing equipment, two of Japan's most important export products.
Yesterday's trade data came on the heels of the Reuters Tankan, which showed business sentiment slipped this month, reflecting firms' fears about an intensifying trade dispute between the US and China.
The batch of data highlighted concerns among Japanese policymakers who worry that Mr Trump may resort to tariffs or other protectionist measures to fix trade imbalances with Japan under his "America First" policy.
The government cut its view of business sentiment and warned it must be "vigilant" about the impact Sino-US trade frictions could have on the global economy, which would in turn affect export-reliant Japan.
"Overall exports remain healthy for now, but we are not sure how things are going to turn out on the trade-policy front," said Mitsubishi UFJ Morgan Stanley Securities senior market economist Shuji Tonouchi. "It's possible that talk of tariffs and trade friction could reduce corporate investment."
With Japanese imports from America down 2.1 per cent, Japan's trade surplus with the US widened 0.5 per cent year on year to 590.3 billion yen (S$7.2 billion). That could make it a potential target for Mr Trump's protectionist policies.
Japan's global exports rose 6.7 per cent last month, while imports gained 2.5 per cent.
The Reuters Tankan, which tracks the Bank of Japan's closely watched quarterly tankan survey, found that the manufacturers' sentiment index stood at 25 this month, down one point from last month, and the service sector's mood fell to 34 from 35 in the prior month.
The index subtracts the percentage of companies that feel negative about the economy from those which are optimistic, so a positive number means more businesses are upbeat. The index is seen rising to 29 in October, while the service sector index is expected to hold steady, after this month's decline led by real estate/construction firms.
In its monthly report for July released yesterday, the government kept intact its assessment for the seventh straight month that Japan's economy was "recovering at a moderate pace". But it said business sentiment was "almost flat", a bleaker view than last month when it said the mood was improving.