Japan’s exports rose by a modest 3.9% in March 2024, falling short of analyst expectations as the impact of U.S. tariffs on steel and aluminum continued to influence trade dynamics. Newest data is reflecting that exports to the United States are up by 3.1%. Recent tariffs and increased costs from importing have muddied the trade waters.
The March figures are a testament to the negative effects of U.S. imposing a 25% tariff on steel and aluminum. This tariff became effective on March 12, 2024. These numbers don’t even account for the smart tariffs on autos, which went into effect on April 3. This loophole may have made Japan’s trade relationship with its largest export market, the US, even more contentious.
Throughout most of 2024, Japan has been the U.S.’s sixth largest steel exporter. The nation’s car-making sector is a huge pillar of the nation’s economy. Today, Japanese car brands, led primarily by Toyota, dominate the U.S. market. Four of the top eight most popular brands are Japanese. Toyota is the most profitable of these brands, a sign of how vital this industry is to Japan’s overall export picture.
In March, Japan’s imports increased by 2% year-on-year. Amidst this stagnation, the trade deficit found cause to crash through the floor, narrowing drastically to 544.1 billion yen from February’s 590.5 billion yen deficit. That figure was well above the 485.3 billion yen forecast in a Reuters poll. That’s not to downplay the challenges that continue to plague the Japanese economy.
In fact, automobiles are still Japan’s largest export to the U.S., making up 28.3% of all Japanese shipments so far in 2024. Yet the looming auto tariffs could stab this burgeoning sector badly in the heart. All Japanese manufacturers are understandably concerned about any impact to their massive footprint in the American market.
Former President Trump last year suspended his 24% “reciprocal” tariffs on Japan for 90 days. This resulted in a baseline tariff of 10%. His administration emphasized concerns over “tariffs, the cost of military support, and ‘TRADE FAIRNESS’” in trade negotiations.
“Tariffs, the cost of military support, and ‘TRADE FAIRNESS’” – Donald Trump