Japan Posts $37 Billion Annual Trade Deficit but U.S. Surplus Soars Amid Tariff Tensions
- Japan recorded surplus with the United States surged to 9 trillion yen ($63 billion), driven by strong exports of vehicles and computer chips.
- The growing surplus has become a flashpoint in trade relations, with U.S. President Donald Trump threatening a 24% tariff on Japanese imports before pausing most new tariffs for 90 days after market backlash.
- Japanese Prime Minister Shigeru Ishiba faces mounting pressure, especially as Japan continues to face a baseline 10% tariff and elevated duties of 25% on cars, steel, and aluminum exported to the U.S.
- Despite the deficit, Japan’s overall exports rose 5.9% year-on-year, buoyed by global demand for electronics and automobiles, while imports rose 4.7%, impacted by a weaker yen.
- A sharp rise in foreign tourism also contributed to export growth, as visitor spending counts toward the export tally.
- For March alone, Japan posted a 544 billion yen ($4 billion) trade surplus, with exports climbing nearly 4% for the sixth straight month of growth.
- Exports to the U.S. rose 3%, while shipments to China declined. However, trade with other Asian markets including Hong Kong, Taiwan, and South Korea increased, possibly due to rerouting strategies to sidestep U.S.-China tariff tensions.
- Analysts suggest Japan might offer concessions, such as importing more U.S. rice, despite its traditionally protected status amid domestic shortages and rising prices.
- Ongoing talks in Washington will be crucial in determining the direction of Japan-U.S. trade, particularly as tariffs threaten to strain relations between key allies.
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