Japanese exports fell year-on-year for the fourth consecutive month in August, as the automotive industry and other export sectors continued to struggle with the negative effects of higher tariffs on imports to the United States. However, the pace of decline slowed to just 0.1 percent from 2.6 percent in July, as the drop in exports to the US was offset by higher exports to the European Union and Asian countries outside China. This is according to today’s data from the Japanese government, as reported by Reuters.
Manufacturers’ response and impact on prices
Economist Saisuke Sakai of Mizuho Research said that Japanese car manufacturers are mostly responding to increased US tariffs by lowering export prices in order to maintain their current sales volume in the United States. “However, some of them are unable to cope with rising costs, so they are starting to raise prices to pass these costs on to customers,” he added.
Japanese exports to the US fell 13.8 percent year-on-year in August. This was the sharpest decline since February 2021. Car exports to the US fell 28.4 percent, and exports of chip manufacturing equipment fell as much as 38.9 percent. “Combined with growing uncertainties about the US economy, the impact of (US) tariffs on Japanese exports and manufacturing is likely to intensify for the rest of the year,” Sakai said.
New trade agreement and tariff policy
At the end of July, the US and Japan concluded a trade agreement that sets a 15 percent tariff on imports of almost all Japanese goods into the US. The administration of US President Donald Trump had previously raised tariffs on Japanese car imports to 27.5 percent and threatened to impose 25 percent tariffs on most other Japanese goods. However, despite the July agreement, tariffs on car imports remain significantly higher than in the past, when they stood at 2.5 percent, Reuters notes.
Source: ÄŒTK
