Japan Trade Deficit 5 Years in a Row, US Tariffs Hit Car Exports

Cars waiting to be shipped at the Port of Yokohama, Kanagawa Prefecture. (Kyodo)

Japan again recorded a trade deficit in the 2025 fiscal year ending March. The value reached 1.71 trillion yen or about US$10.7 billion. This is the fifth consecutive year that Japan has been in the deficit zone.

However, the cause cannot be simplified into one factor. The deficit has been occurring in the last five years. What is clear is that in fiscal year 2025, US import tariffs will intensify pressure, especially on Japanese car exports.

According to a Kyodo News report quoted Wednesday, April 22, the Japanese Ministry of Finance's initial report said that Japanese exports throughout fiscal year 2025 still rose 4 percent. The increase was supported by demand for semiconductors and other electronic devices. On the other hand, imports rose slightly by 0.5 percent, driven by demand for communication devices.

Problems arose in the United States market. Shipments of Japanese goods to the country fell 6.6 percent, the first decline in five years. Car exports fell even deeper, by 15.9 percent.

The US did lower the import tariff on Japanese cars to 15 percent in September, from 27.5 percent in April, after a trade deal between Tokyo and Washington. Even though it's down, the figure is still far above the 2.5 percent tariff that applied before Donald Trump returned to the White House.

The data shows that electronic exports still support Japanese exports, but the automotive sector remains the fastest to falter when the US market doors narrow. For Japan, it shows that cars are still the lifeline of its exports.

For March alone, Japan recorded a trade surplus of 667 billion yen, up 25.9 percent from a year earlier. Meanwhile, crude oil imports rose 2.4 percent in volume, or the third consecutive month.

Regarding the impact of the US-Israeli war against Iran, ministry officials said the import figures still reflected supplies from the Middle East before the attack began on February 28. The Japanese government, according to the official, is also pushing for securing supplies from other regions, including the United States.