Trump slaps 30% tariffs on EU, Mexico
Investing.com-- Japan’s trade balance shrank less than expected in May, supported in part by a smaller than expected drop in exports, which reflected limited impact from high U.S. trade tariffs on key goods.
Trade balance was a deficit of 637.6 billion yen ($4.39 billion), government data showed on Wednesday, compared to expectations for a deficit of 893.0 billion yen. The print also worsened from 115.8 billion yen deficit seen in the prior month.
Exports fell less than expected, down 1.7% year-on-year against expectations for a drop of 3.8%. They also reversed course from a 2% gain in the prior month.
Increased U.S. tariffs- on automobiles and steel– were a major pressure point on Japanese exports, as they ramped up their cost for overseas buyers. A 10% universal tariff in the U.S. also dented overall exports to the country, which is among Japan’s biggest export destinations.
Local demand also appeared to be weak, with Japanese imports shrinking 7.7% y-o-y, much more than expectations of 6.7% and worsening from the 2.2% drop seen in the prior month.
The weak import print raises some questions over strength in Japanese consumption, which is usually a major driver of economic growth.
Tokyo is racing to reach a trade deal with the U.S. in order to stem further export weakness. But there appears to be limited progress in talks, given that Japan is unwilling to drop its demand that the U.S. exempt the country from all trade tariffs.