Japan is experiencing a notable slowdown in exports along with a mounting trade deficit, driven largely by the looming threat of U.S. tariffs. In recent months, exports have declined for the second consecutive month, with shipments to the United States—Japan’s largest trading partner—dropping sharply. The planned tariffs on Japanese vehicles and other goods are intensifying pressure on key sectors, including the automotive industry.
Compounding the issue is a stronger yen, which has made Japanese products more expensive for foreign buyers, further weakening demand. Exports to other important markets such as China and Mexico have also seen significant declines.
As a result, Japan recorded a trade deficit in the first half of 2025, marking a shift from its usual surplus position. The government is actively engaged in negotiations with the U.S., but with tariff deadlines approaching, economic risks are rising. Analysts warn that prolonged trade tensions could slow Japan’s economic growth and potentially push the country into recession.
Investor concerns have led to a weakening of the yen against the U.S. dollar, reflecting uncertainty about Japan’s economic outlook. The coming months will be critical as trade talks continue, shaping Japan’s economic trajectory amid global challenges.
