Japan’s exports post first drop in eight months as US tariffs hit auto firms

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TOKYO: Japan’s exports fell for the first time in May in eight months as major car makers like Toyota were subjected to clearing US prices, and this week’s failure of Tokyo’s trade deal will be pressing a critical economy.

After the Group of Seven Summit in Canada on Tuesday, Japanese Prime Minister Shigro said that his country had not reached a comprehensive tariff agreement with Washington as some differences between the two countries remain.

He added that Japan and the United States “sought the possibility of an agreement until the last minute.” Japan also faces a 24 % ‘mutual’ tariff rate starting July 9 unless they can discuss a deal with Washington.

The share of Japan’s automobile sector was about 28 trillion yen ($ 145 billion) worth about 28 28 percent, which the Asian country exported to the United States last year. In May, its total exports dropped by 1.7 percent year -on -year to 8.1 trillion yen, official data predicted a middle market to reduce 3.8 percent, and then predicted a middle market for a 3.8 percent reduction.

Exports to the United States declined by 11.1 % last month, compared to a year ago, the largest monthly percentage decline after February 2021, a decrease of 24.7 % in automobiles and a 19 % decline in auto components, while a strong yen also helped reduce the price of shipments. Exports to China were 8.8 % lower.

However, in terms of volume, only 3.9 % of the US -affiliated automobile exports were submerged, which shows that the largest Japanese exporters are absorbing tariff costs. “This shows that Japanese are effectively shoulder the cost of car makers and are not charging consumers.”

So far, big Japanese car makers have avoided raising prices in the United States to reduce tariff costs, except for Sabaro and friendly motors, Akimoto said. He added that the absence of prices could affect his profit, but his financial base is usually solid.

Although Japanese stocks and yen reacted very little to the data, the shares of car companies have been under pressure this year due to concerns about tariff effects. Automackers and other transport companies this year 33 sectors of the Tokyo market are about 12 % lower in sub -India. Only health equipment makers are damaged.

Toyota, which is the world’s highest -selling automaker, estimates that perhaps in April and May, the rates had cut 180 billion yen. Honda has said it expects the United States to earn 650 billion yen this year from the US and elsewhere.

Japan’s data trade may be on how US President Donald Trump’s prices are affecting countries and the global economy. Chinese data showed this week that the country’s factory production increased by 5.8 % year -on -year, which is the slowest pace in six months. And its outbound shipment in the United States fell 34.5 %, the fastest decline since February 2020.

The upcoming prices forced companies to increase the shipment of Japan and other major Asian exporters earlier this year, during which time the level of US -bound exports increased. Japan’s data shows that imports have decreased by 7.7 % from a year ago, while the market has been forecast to reduce 6.7 percent.

As a result, Japan made a trade deficit of 637.6 billion yen last month, compared to 892.9 billion yen.

Drag on GDP

The hit from US prices can put pressure on Japan’s undeniable economy. The fourth largest economy in the world shrunk in January due to private consumption, which is the first contraction in a year.

However, a small reduction in May’s delivery suggests that Japan’s export driver has not stumbled, which has increased the chances of avoiding the economy’s contraction in the April -June quarter, with a report in a report by Mezhoho Securities, a economist.

Although tariff problems complicate the work of the Bank of Japan, which still complicates the task of increasing low interest rates and reducing a balance sheet, which sizes Japan’s economy almost sized.

The BOJ had kept interest rates stable on Tuesday and decided to slow down its balance sheet next year, and it has indicated its preference to move cautiously to remove its widespread, decade -long stimulus.

According to an estimated Japan Research Institute, if all threatening tariff measures against Japan are to be implemented, US exports will decrease by 20-30 %. Some economists say that these duties can be shaped about 1 % of the country’s total domestic products.