Japan ships fewer cars to US as export growth slows

Toyota vehicles bound for shipment at Nagoya Port. Japan’s exports to the United States fell 5.2 per cent year on year last month, down for a second straight month, due to a 12.1 per cent decline in car shipments.
Toyota vehicles bound for shipment at Nagoya Port. Japan’s exports to the United States fell 5.2 per cent year on year last month, down for a second straight month, due to a 12.1 per cent decline in car shipments. PHOTO: BLOOMBERG

TOKYO • Japan's export growth slowed more than expected in July as shipments to the US fell for a second straight month, with the automotive sector down sharply and global trade disputes casting doubts over foreign demand.

Ministry of Finance (MOF) data out yesterday showed exports rose 3.9 per cent year on year last month, far below a 6.3 per cent increase expected by economists in a Reuters poll. The rise followed a 6.7 per cent year-on-year gain in June.

Japan's exports to the United States fell 5.2 per cent year on year last month, down for a second straight month, due to a 12.1 per cent decline in car shipments.

"The drop in US-bound car exports was in reaction to brisk sales seen there a year ago, boosted by the solid US economy and declines in oil prices," said an MOF official.

"We cannot say whether it was affected by trade tensions with the United States."

US President Donald Trump has made the threat of heavy tariffs a core part of his agenda, with an eye on the US auto sector's trade deficit with countries such as Germany and Japan, raising speculation about restrictions on US-bound car exports.

Japanese carmakers have so far shown no sign of rushing to boost car shipments to the US, which would happen if they anticipated higher tariffs were to be imposed on their products in coming months.

"While caution is heightening over US trade policy, US car sales are levelling off, causing Japan's car exports to the United States to level off as well," said chief economist at Norinchukin Research Institute Takeshi Minami.

"If capital outflows from emerging economies accelerate on top of this, it would cause a marked slowdown in global economy, further weighing on Japan's exports."

Imports from the US rose 11 per cent in the year to July, led by crude oil, motors and liquefied petroleum gas. As a result, Japan's trade surplus with the US fell 22.1 per cent year on year to 502.7 billion yen (S$6.2 billion).

Exports to China, Japan's largest trading partner, rose 11.9 per cent in July from a year ago.

Shipments to Asia, which account for more than half of Japan's overall exports, rose 8 per cent, led by semiconductor production equipment and electronics parts for China and sales of steel to Thailand.

Overall imports rose 14.6 per cent in the year to July, roughly matching economists' median estimate, resulting in a trade deficit of 231.2 billion yen, vastly exceeding the expected 50 billion yen.

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 17, 2018, with the headline 'Japan ships fewer cars to US as export growth slows'. Print Edition | Subscribe