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Investing.com-- Japan clocked a smaller than expected trade surplus in June, with exports continuing to decline amid persistent headwinds from U.S. trade tariffs and sluggish overseas demand.
Japan’s trade balance was a surplus of 153.1 billion yen ($1 billion) in June, government data showed on Thursday. The print was softer than expectations for a surplus of 353.9 billion yen, but improved from the 638.6 billion yen deficit seen in the prior month.
Still, Japan’s exports shrank 0.5% year-on-year in June, against expectations for a rise of 0.5%. Exports shrank for a second consecutive month, reflecting the sustained impact of U.S. tariffs on key sectors, specifically automobiles and steel.
U.S. President Donald Trump earlier this year imposed a 25% tariff on all foreign automobiles, a move that stands to greatly impact Japan’s carmaking giants. The country is a major exporter of autos to the United States.
Outside the U.S., demand in top market China was also seen cooling, as economic growth and consumer spending in the country came under pressure from U.S. tariffs.
Still, domestic Japanese demand showed some signs of recovery. Imports grew 0.2% year-on-year, faring much better than expectations for a 1.6% drop, while also improving substantially after a 7.7% slide in the prior session.
Japan now faces a 25% tariff on all exports to the U.S., effective August 1, with Tokyo still holding out for a trade deal with Washington. But negotiations between the two were seen falling through in recent weeks, as Japan demanded that it be exempt from all U.S. tariffs.