Japan's exports rose for a fourth consecutive month, data showed on Wednesday, signalling that strong global demand is underpinning the country's economic recovery amid growing concerns over U.S. tariff policies.
The trade report comes after GDP data earlier this week showed the economy grew faster than expected in the October-December quarter, strengthening the case for the central bank to continue raising interest rates.
Japan, meanwhile, is bracing for potential fallout from U.S. tariff threats, as President Donald Trump considers imposing duties of around 25% on imported cars and reciprocal tariffs on countries that tax U.S. imports.
Total exports in January rose 7.2% year-on-year, according to the data, less than a median market forecast for a 7.9% increase and following a 2.8% rise in December.
Exports to China in January dropped 6.2 % from a year earlier, while those to the U.S. were up 8.1%, the data showed.
Imports grew 16.7% in January from a year earlier, compared with market forecasts for a 9.7% increase.
As a result, Japan ran a trade deficit of 2.759 trillion yen ($18.16 billion) compared with the forecast of a deficit of 2.1 trillion yen.
Trump's tariff policies could have a huge impact on Japan's export-reliant economy, as the U.S. is Japan's largest export destination, accounting for a fifth of its total shipments valued at $700 billion.
In terms of reciprocal tariffs, Japan's average applied tariff rate is among the lowest in the world, but non-tariff barriers, such as automobile safety regulations, could come under increased scrutiny.
Automobiles are the biggest U.S export product, accounting for 28% of U.S.-bound exports.
Trump pressed Japanese Prime Minister Shigeru Ishiba at their first White House summit this month to close Japan's $68.5 billion annual trade surplus.
Japan had the largest foreign direct investment position in the United States in 2023 with $783.3 billion, followed by Canada, and Germany, according to data from the U.S. commerce department.
Exports continue to be a key driver of Japan's economic recovery, while some analysts caution that persistent inflation in food and other everyday products could dampen momentum in private consumption.
($1 = 151.9400 yen)
($1 = 151.9300 yen)
