Japan exports to US plummet 14% in August as tariffs weigh

Japan reported a decline in both exports and imports in August, provisional figures released by the Ministry of Finance showed on Wednesday.

Japan's trade balance deficit widened to JPY242.53 billion, approximately USD1.66 billion, in August from JPY118.44 billion in July. In August 2024, Japan had a JPY711.44 billion deficit.

Exports edged down 0.1% year-on-year in August, easing from a 2.6% decline in July. However, a decline of 1.9% was expected based on the consensus forecast cited by FXStreet.

Meanwhile, imports fell 5.2% in August, easing from a 7.4% drop in July but surpassing the 4.2% decline that was forecast.

Notably, exports to the US plunged almost 14% in August on-year, accelerating from a 10% drop a month earlier. Car exports were down 28%, while auto parts fell 7.1%, the data showed.

"While Japan’s annual export growth fell for the fourth consecutive month, the monthly momentum has been improving slightly after seasonal adjustment. In any case, the largest drag still came from the US due to higher import tariffs.

"The US and Japan might have struck a trade deal with an investment clause back on 22 July, but most Japanese goods – including strategic exports of cars, which account for around 20% of exports – are still subject to 15% universal duties, higher than in the pre-Trump era," said Kelvin Lam, senior China+ economist at Pantheon Macroeconomics.