Japan Trade Deficit: Updated April 25, 2025.

Japan logs 5.2 tril. yen FY 2024 trade deficit despite record exports

Article Source: https://mainichi.jp/english/articles/20250417/p2g/00m/0bu/012000c

Ideas:

The Japanese economy, like all economies, is very complex and there is no way exactly to predict if there will be a trade deficit or a trade surplus each month or each quarter or even each year.

There are always going to be spurts of export growth or spurts of import growth depending on the supply and demand of products and these days the efficiency of supply lines.

Japan has always been an export oriented economy but at the same time is a resource-poor country which means it has to import much of what is needed to survive.

Not to say anything negative but imports of personal computers from the US and smartphones from China, might indicate Japanese electronics are not selling very well in Japan and US and China products have become more popular these days.

It's quite possible that Japanese smartphones and personal computers, with inflation rampant in Japan, are now more expensive than US products or Chinese products.

And of course there is the weak Japanese yen situation which you would think would make Chinese and US products more expensive but maybe they aren't as again, some Japanese products in Japan seem to be very expensive compared to foreign products.

Japanese export companies continue to do their part as maybe demand for Japanese products globally are still very good based on the data given in the article.

The weak Japanese yen has both positives and negatives for the Japanese economy, as a weak Japanese yen improves the profits of Japanese exporters while it hurts Japanese import companies that need to import much of what Japan wants and needs.

But right now, as Japanese consumer demand is weak or not so good, Japanese exports might be the only area that is helping the Japanese economy.

Semiconductor manufacturing equipment, electronics components, and Japanese vehicles to the US have become and remain the key economic drivers in an economy that is still looking and hoping for a revival of Japanese consumer spending, which again, is less than normal these days, due to increased inflation.

But of course, unfortunately, with the trade talks, things might be better or worse in the future depending on what Japan can get from the US administration.

Again, the T administration seems to know nothing or doesn't care about absolute or comparative advantage related to international trade or international economics.

If Japan doesn't have any significant free trade pacts now might be a good time to get some implemented as way to try and reduce some of its imports costs to help the Japanese economy and Japanese households with their expenses.

For example it seems strange that maybe Japan has no free trade agreement with the US as both are major trading partners and it would be beneficial for both economies.

But the sticking points might be some Japanese products that the Japanese government wants to protect some industries or sectors that they feel are very important to Japanese culture.

While those in authority might say the Japanese economy is recovering moderately, try telling that to the average Japanese family or household and see what they say about that.

The only thing that matters to Japanese households, like other households globally, is the price of products they need and their incomes. They could care less about what the GDP is doing or any of those media talking points these days.

Always take the T administrations ideas with a grain of salt, as they can and will change their minds frequently which means businesses and stock markets can't plan on anything significant in the future.

Trade wars are terrible and they hurt all countries and economies as there are no by-standers in a trade war, as too many supply chains are too intermingled with all economies globally.

No one knows for sure what is going to happen just yet, as again, its a little too early just yet, to see anything significant.

However, in the US, many companies are cancelling orders from China due to the US/China trade situation, which is going to hurt US consumers in the near future.

Lets hope Japan didn't get caught in the US/China situation too much as they try to navigate the situation.

Yes, at this time trade between the US and Japan is robust and very significant and lets hope it can continue as Japanese products, especially Japanese cars are very popular in the US now.

And a global slowdown is always possible and some might put it at around a 40 percent chance now of some kind of global recession if the T administration implements the tariffs as is.

The Chinese economy is still going through some kind of transition period ever since the pandemic and still hasn't been able to get its footing yet.

The Chinese economy is still a viable economy and it would be wise for Japanese companies to continue to do business in China even though recently it hasn't been as what it was in the past.

The rest of Asia and Japan remain strong trade partners and most likely will continue to be that way despite what is happening with China and the US in the future.

The European Union is a very different story related to trade, and maybe yes or no the Ukraine situation might have some effect on trade with Japan.

But it's been 13 years that trade with the EU has been in the red, so the Ukraine situation can't be the only reason for the continued trade deficit with the EU.

There are always going to be some good months and some not so good months as maybe trade with some products is more related to demand and or how much a company thinks demand will be for the coming months.

The 10 percent tariff implemented on Japanese cars may or may not have a significant effect on car sales in the US as it's too early to tell exactly.

Yes, demand for some products are not the same each month and there will be fluctuations in orders for some products depending on expected demand or projected demand of products in the future.

But yes, the tariffs potentially could have an effect depending on the products and depending on the demand for the product in the future.

Have a nice day!