Japan: Exports lose steam in March as trade talks with U.S. in focus
Latest reading: Yen-denominated merchandise exports rose 4.0% year on year in March. The print undershot market expectations for the second consecutive month and was down from February’s 11.4% increase.
Meanwhile, yen-denominated merchandise imports increased 1.8% in March, flipping from February’s 0.7% fall.
Overall, the yen-denominated merchandise trade surplus was broadly stable from the previous month’s near four-year high of JPY 0.5 trillion in April.
Outlook: On 9 April, the U.S. hit Japan with a 24% levy on its exports, as part of a larger set of “reciprocal” tariffs announced by Trump. Though now paused for 90 days, a 10% levy remains in place, as does a 25% charge on auto shipments, which will be hurting Japanese exports as the U.S. is Japan’s number one export destination.
That said, exports are still seen growing roughly twice as quickly in 2025 compared to 2024, boosted by higher global demand for IT products, one of Japan’s strengths. Moreover, Japan and the U.S. are reportedly in talks for a trade deal, with Japan’s chief negotiator recently stating he was hoping for a deal by June, posing an upside risk to the outlook.
Panelist insight: Commenting on the outlook, Nomura’s Yuki Kodera and Kyohei Morita said:
“After adjusting for inflation and seasonality, we estimate that real goods exports were down 4.3% m-m in March and that real goods imports were up 0.6%. That said, real goods exports remain at a high level. On a quarterly basis, we estimate that real exports were up 3.0% q-q and real imports were up 2.4% in Jan–Mar.”