Japan’s exports in January amounted to 7.86 trillion yen, growing by 7.2% year-over-year (prior: 2.8%), according to The Ministry of Finance of Japan on February 19.While slightly below the market expectation of 7.6%, exports maintained growth for the fourth consecutive month.
Imports surged to 10.62 trillion yen, up 16.7% year-over-year (prior: 1.8%), resulting in a trade deficit of -2.75 trillion yen (prior: 130.94 billion yen). After briefly turning positive last month, the trade balance returned to negative territory, marking the largest deficit in nearly two years.
From a product category perspective, January's export growth was primarily driven by transportation equipment, with automobile exports—the largest category—rebounding significantly by 10.5% year-over-year (prior: -5.9%), contributing 1.7 percentage points to overall export growth.
In contrast, the previously strong-performing machinery and electronic equipment sectors showed a notable slowdown, with growth decelerating to 0.8% (prior: 3.7%) and -0.6% (prior: 4.7%), respectively. Notably, semiconductor and electronic components saw year-over-year growth slow to 2.2% (prior: 6.5%), while semiconductor manufacturing equipment entered a downturn, with a sharp decline to -1.6% (prior: 10.6%).
By region, exports to China continued to decline, falling -6.2% year-over-year (prior: -3.0%). This reflects not only ongoing weakness in the Chinese economy but also Japan’s continued alignment with U.S. restrictions on semiconductor exports to China. Exports of semiconductor electronic components to China saw a sharp year-over-year decline of -13.6% (prior: 6.4%), while semiconductor manufacturing equipment exports plunged further, contracting -20.8% (prior: -10.4%).
At the end of January, the Japanese government announced stricter export controls on advanced semiconductors, quantum computing, and other critical technologies, set to take effect at the end of May. In response, China's Ministry of Commerce warned that such measures could harm normal business transactions and mutual interests, stating that China would take necessary countermeasures.
Exports to the U.S. rebounded, rising 8.1% year-over-year (prior: -2.1%), with automobile exports reversing their previous weakness and surging 21.8% year-over-year (prior: -6.8%). This suggests that, under the looming threat of potential tariffs from Trump’s administration, U.S. demand for Japanese automobiles may have been brought forward.
Japan’s trade surplus with the U.S. reached 477 billion yen in January, while its trade surplus with the U.S. for all of last year stood at 8.6 trillion yen—the fifth-largest in history. This growing trend could further exacerbate U.S. dissatisfaction over its long-standing trade deficit with Japan.
The Trump administration continues to introduce additional tariff measures. It has already announced plans to impose a 25% tariff on steel and aluminum-related imports in March and is preparing to negotiate reciprocal tariffs with individual countries. On February 18, the administration further announced intentions to impose a 25% or higher tariff on imported automobiles, semiconductors, and pharmaceuticals, with specific details expected as early as April 2.
Given that automobiles account for a significant portion of Japan's exports, with U.S.-bound automobile exports making up nearly 40% of total automobile exports, a swift implementation of auto tariffs could have a substantial impact on Japan’s auto industry and overall economy. The Japanese government is actively seeking exemptions from steel and aluminum tariffs and engaging in negotiations on reciprocal tariffs with the U.S. to minimize potential negative economic impacts on Japan.