Japan’s Exports Plunge Amid US Tariff Pressures, Auto Sector Hit Hardest

Japan's exports contracted 2.6% in July, marking the steepest decline since 2021 as US tariffs crippled auto shipments. The trade-reliant economy saw car exports to America plummet 28.4%, with auto parts dropping 17.4%—a direct consequence of April's 25% US tariff imposition on vehicles and components.

While export volumes remain stable due to price absorption strategies, economists warn the relief may be temporary. "Firms will eventually pass costs to US consumers," warns Norinchukin Research Institute's Takeshi Minami, predicting further sales deterioration. The yen's 12% depreciation this year fails to offset trade headwinds as global demand weakens.

July's export slump exceeded forecasts, extending a three-month downturn. Financial terms reveal a worrying trend: the 10.1% US export decline outweighs modest gains in European and Chinese markets, exposing Japan's vulnerability to protectionist policies.