Japan’s exports fell for the second consecutive month in June, reinforcing fears of a technical recession as trade tensions with the United States continued to weigh heavily on the economy.
The Ministry of Finance reported on Thursday that exports by value dropped 0.5% year-on-year, missing the median forecast for a 0.5% increase. The decline was led by sharp contractions in car and steel shipments, reflecting the impact of tariffs imposed by the Trump administration.
Meanwhile, imports edged up 0.2%, and Japan’s trade balance returned to a surplus of ¥153.1 billion (US$1 billion) — the first time in three months.
Exports to the US plunged 11.4%, while those to China slipped 4.7%. Shipments to Europe bucked the trend, rising 3.6%. The average yen exchange rate in June stood at 144.04 per US dollar, about 8% stronger than a year ago, reducing the yen value of Japan’s dollar-denominated exports.
The continued slump in exports adds to growing concerns that the economy could contract again in the second quarter, following a contraction at the start of the year. Although domestic consumption surged in May, it remains uncertain whether that trend is sustainable, particularly as inflation still outpaces wage growth.
Tokyo is currently facing a 25% tariff on cars and car parts, alongside a 50% duty on steel. A general 10% tariff on all other US-bound goods was also imposed in June. This across-the-board levy is scheduled to increase to 25% on 1 August, slightly higher than the initial 24% proposed in April, unless a deal is reached.
Global trade conditions remain highly volatile. The Trump administration’s tariff threats have resulted in few new bilateral deals, with negotiations, including those with Japan, dragging on as countries struggle to find common ground.
