TOKYO — Japan’s exports fell for a second straight month as sweeping US tariffs took a toll on the country’s manufacturers, with its fragile economy exposed to greater risks from the global trade war in coming months.
Japan failed to clinch a deal with the US before the July 9 expiration of the temporary pause on the country-specific tariffs after it focused on eliminating the existing sectoral 25 percent tariffs on automobiles, a mainstay of the export-reliant economy.
Washington now plans to impose tariffs of 25 percent on Japanese imports, unless a trade deal is struck by August 1.
“The tariff impact is likely to intensify in coming months, when the tariff rate is finalised and Japanese companies begin to fully pass on costs to consumers in the US, which would hamper competitiveness of Japanese products there,” Daiwa Institute of Research economist Koki Akimoto said.
Exports from the world’s fourth-largest economy dropped 0.5 percent in June year-on-year in value terms, compared with a median market forecast for a 0.5 percent increase and a 1.7 percent decrease in May, the first decline in eight months.
Exports to the United States tumbled 11.4 percent in June from a year earlier, the largest monthly percentage decline since February 2021, dragged down by a 26.7 percent plunge in automobiles, a 15.5 percent fall in auto components and a 40.9 percent plunge in pharmaceuticals.
But the volume of automobile shipments rose 3.4 percent, indicating Japanese automakers are cutting prices on exported cars and absorbing tariff costs to stay competitive.
“Japanese automakers have so far kept production levels by sacrificing margins, so the tariff impact on their production activities has been limited,” Koya Miyamae, senior economist at SMBC Nikko Securities, said.
But Daiwa’s Akimoto said Japanese companies would be forced to raise prices eventually, as trade negotiations drag on and the yen stays relatively strong.
Japan exported 21 trillion yen worth of goods to the United States last year, with automobiles representing roughly 28 percent of the total.
Japan’s trade surplus with the US in June fell 22.9 percent to 669 billion yen ($4.51 billion).
Exports to China were down 4.7 percent, the data showed.
Total imports grew 0.2 percent in June from a year earlier, compared with market forecasts for a 1.6 percent drop.
