Vehicles awaiting shipment are parked at a port on March 27, 2025 in Yokohama, Japan. U.S.
Tomohiro Ohsumi | Getty Images
Japan exports growth slowed for a second straight month, government data showed Wednesday, as the country reels under U.S. President Donald Trump’s sweeping tariffs.
Exports growth of 2% was in line with Reuters-polled analysts’ estimates, its slowest since October last year and the worst showing since September when shipments fell 1.7%.
The country’s imports shrank 2.2% from a year ago, less than estimates of a 4.5% decline.
Japan’s exports of transport equipment, including motor vehicles and parts, to the U.S. fell 4.1% by value from a year earlier. Automobiles are Japan’s top export to the U.S., accounting for 28.3% of all shipments in 2024, according to customs data.
Japan is being charged a 25% levy on its auto, steel and aluminum exports to the U.S. The key U.S. ally is also subject to the 10% baseline tariffs imposed by Trump on most trade partners. Japanese goods also face “reciprocal” tariffs of 24% which have been temporarily suspended.
Trump on April 2 levied “reciprocal” tariffs on more than 180 countries including Japan, only to suspend them about a week later for 90 days following market turmoil, and allowing trade partners to strike deals with Washington during this period.
By region, Japanese overall exports to China and the U.S., its largest trading partners, fell 0.6% and 1.8% from a year earlier, respectively. That marked a notable turnaround after the country’s exports to the U.S. rose 3.1% in March.
“Net exports will remain a drag on GDP growth in Q2,” Abhijit Surya, senior APAC economist at Capital Economics said in a note, anticipating the central bank to push its next interest rate hike to October when there is greater certainty on U.S. tariffs.
Japan’s real gross domestic product contracted an annualized 0.7% in the first quarter this year, preliminary government data showed, dragged down by stagnant private consumption and slowing exports growth.
“Japan’s manufacturers are in for a tough time,” said Stefan Angrick, head of Japan and frontier markets economics at Moody’s Analytics, noting that trade policy “flip-flops” risk creating whiplash that would ripple through the economy, hurting growth.
Even if Japan strikes a deal with the U.S., “a full return to pre-Trump terms is not on the table,” Angrick said.
While Japan was the first to start the bilateral trade talks with the U.S., its negotiation appear to have stalled. On Tuesday, Japan’s top trade negotiator Ryosei Akazawa reportedly reiterated that U.S. remove tariffs on Tokyo.
Japan will not rush to seal a trade deal if that risked harming the country’s interests, he said.