Japan Exports Slip Again In June As Trump Tariffs Bite, With Doubts Over Trade Deal

Exports from Japan declined again in June, following a 1.7% drop in May, as U.S. tariffs continue to heighten the risk of a recession.

According to a CNBC report, exports from the Asian powerhouse declined 0.5% last month, while economists polled by Reuters had expected a 0.5% rise. The June drop was led by an 11.4% plunge in exports to the U.S., while deliveries to China declined by 4.7%.

The Ministry of Finance Data gave a fresh look at how the Trump administration’s tariffs are impacting trade. Last month, Japan’s exports to the U.S. had fallen 11%. Washington, D.C., intends to impose additional 25% reciprocal tariffs on Japanese exports from Aug. 1 unless the two sides reach a trade agreement.

However, hopes of a quick deal are diminishing slowly. On Wednesday, Trump said that he does not expect to reach a broader agreement with Japan anytime soon. Prime Minister Shigeru Ishiba has repeatedly said that his administration would not make concessions if it harmed Japanese interests.

One of the primary contentious issues regarding a trade deal remains tariffs on Japanese car exports. Since April 3, the U.S. has already imposed 25% tariffs on Japanese automobiles, which make up nearly 30% of all exports to the U.S.

Thursday’s data showed that exports of automobiles, which include cars, buses, and trucks, to the U.S. declined by 26.7% in June, following a 24.7% drop in May. However, car export volumes rose 4.6% compared to the same month last year, indicating that Japanese exporters are providing deep discounts to U.S. customers to maintain market share.

According to a report by The Wall Street Journal, Marcel Thieliant, head of Asia-Pacific at Capital Economics, said, “While overall exports are still holding up well, those to the U.S. are plunging, and we think soft global demand will result in a further decline over the coming quarters.”

Retail sentiment on Stocktwits about the iShares MSCI Japan ETF (EWJ) was in the ‘bullish’ territory.

Separately, Japan’s top trade negotiator, Ryosei Akazawa, and U.S. Commerce Secretary Howard Lutnick held a 45-minute phone call Thursday to discuss the impending U.S. tariffs.

The U.S. also wants Japan to accept its agricultural exports, which the ruling Liberal Democratic Party has so far resisted.

As per the report from the Journal, the fresh duties alongside the tariffs on cars, steel, and aluminum could easily wipe 1% off Japan’s gross domestic product, Stefan Angrick at Moody’s Analytics said.

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