Japan Hit with Trade War Losses
Japan’s politically sensitive trade surplus with the United States shrank sharply in July, according to official data published Thursday, as the two allies continue to cross swords over US trade policy.
The surplus with the US shrank 22.1 percent with reduced shipments of motor vehicles and microchip-making equipment dragging down the figure.
“The drop in U.S.-bound car exports was in reaction to brisk sales seen there a year ago, boosted by the solid U.S. economy and declines in oil prices,” said an MOF official in charge of compiling the data.
Despite a close political and economic relationship, Japan was not spared from President Donald Trump’s tariffs on steel and aluminium products and Tokyo has warned it could retaliate at the World Trade Organization.
Top officials from both sides met in Washington last week but no breakthrough was announced after the talks.
Overall, Japan logged a trade deficit of 231.2 billion yen ($2 billion) last month, compared to a surplus of 406.6 billion yen recorded in the same month last year.
With the yen strengthening against the dollar, exports registered their slowest growth in four months, rising 3.6 percent year-on-year. Meanwhile, imports jumped 14.6 percent.
Japan’s deficit with its biggest trading partner China shrank 17.8 percent as exports rose 11.9 percent, a double-digit rise for the fifth consecutive month.
U.S. President Donald Trump has made the threat of heavy tariffs a core part of his agenda, with an eye on the U.S. auto sector’s trade deficit with countries such as Germany and Japan, raising speculation about restrictions on U.S.-bound car exports.
Japanese carmakers have so far shown no sign of rushing to boost car shipments to the United States, which would happen if they anticipated higher tariffs were to be imposed on their products in coming months.
Imports from the United States rose 11.0 percent in the year to July, led by crude oil, motors and liquefied petroleum gas.
As a result, Japan’s trade surplus with the United States fell 22.1 percent year-on-year to 502.7 billion yen ($4.55 billion).