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As export growth declines, Japan begins shipping fewer cars to U.S

Updated September 18, 2018

Earlier in the day, August 16th, data released by the Ministry of Finance (MOF) showed that exports have risen by 3.9 percent year-on-year for the month of July.

Significantly below the expected 6.3 percent increase by economists in a Reuters poll. The rise for the month of July follows a 6.7 percent year-on-year gain for the previous month.

Due to a 12.1 percent decline in car shipments, Japan’s export to the United States dropped by 5.2% year-on-year in July.

A statement released by a MOF official in charge of compiling the data, reads, “The drop in U.S.-bound car exports was the outcome of abrupt sales seen there in the previous year, due to decline in oil prices and also due to the solid U.S. economy.”

The statement further reads, “We cannot say for certain that it was affected by trade tensions with the United States.”

Laying emphasis on the U.S. auto sector’s trade deficit with countries like Japan and Germany, President of the United States of America, Donald Trump has made the threat of heavy tariffs a core part of his agenda, giving rise to speculation of restrictions on U.S.-bound car exports.

However, so far no Japanese carmaker has shown no signs of increasing its car shipments to the United States.

According to Takeshi Minami, chief economist at Norinchukin Research Institute, “While caution over U.S. trade policy is increasing, U.S. car sales are also simultaneously leveling off, which in turn is leveling off Japan’s car exports as well.”

He further added, “As a result of this, if capital outflows from emerging economies accelerate, it would lead to a marked slowdown in global economy, which would further affect Japan’s exports.”

Led by motors, liquefied petroleum gas, and crude oil, Imports from the United States rose 11.0 percent in the year to July.

Which caused Japan’s trade surplus with the United States to fall by 22.1 percent year-on-year to 502.7 billion yen ($4.55 billion).

In comparison to the previous year, Exports to China, Japan’s largest trading partner, rose 11.9 percent in July from a year ago.

Led by sales of electronic parts for China, semiconductor production equipment, and sales of steel to Thailand, Shipments to Asia, which make up for more than half of Japan’s overall exports, rose 8.0 percent.

Overall imports rose 14.6 percent in the year to July, partially matching economists’ median estimate.

The trade figures are seen on Thursday (August 16th) came after gross domestic product (GDP) data in the previous week showed Japan’s economy,( World’s Third-largest), rallied in the second quarter from a January-March dip.

Analysts claim that even as global economic growth would most likely aid Japan’s exports, the same cannot be said for international trade conflicts as they are an ever-present risk to Japan’s export-reliant economy.

Several Analysts have also predicted that higher U.S. tariffs on Japanese automotive exports would make a significant impact on the broader economy.

As it shows recovery from an earlier contraction, Japan’s economy grew at an annualized rate of 1.9 % in the second quarter mainly due to business and household spending.

($1 = 110.5400 yen)



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Uriah Nazario
About Uriah Nazario

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