Japanese exports growth up 3.9%, falling short of expectations amid U.S. tariffs concerns

Japanese exports rose 3.9% in March, slowed by Trump’s steel and aluminum tariffs. Economists polled by Reuters noted that the country’s growth missed their expectations of a 4.5% rise and was also lower than the 11.4% surge in February.

Japan was issued 25% tariffs on auto imports to the U.S. effective April 3 and 25% levies on steel and aluminum, which came into effect on March 12. Trump later suspended his “reciprocal” tariffs of 24% on Tokyo for 90 days but left a baseline tariff of 10%.

Japanese export growth misses expectations in March

Tokyo saw a 3.9% increase in March exports compared to a year earlier, a month after the country also reported its largest rise in exports since May 2024.

Economists polled by Reuters were expecting a 4.5% rise in export growth, which was lower than Japan’s 11.4% rise in February. Data also showed that Japanese exports surged the most in the Middle East region, recording a 17.1% increase compared to the same period a year ago.

The country’s exports to the U.S., its second-largest trading partner, increased 3.1% amid Donald Trump’s heightened trade policies. Last month’s data does not include the full impact of the President’s tariffs. 

Data showed that Japan was the sixth largest steel exporter to the U.S. last year, and the country’s car brands make up four of the top eight best-selling brands in the U.S., with Toyota taking the top spot.

Customs data revealed that automobiles are Japan’s top export to the U.S., accounting for 28.3% of all shipments in 2024. Imports to Asia’s second-largest economy by GDP surged 2%, compared to a Reuters poll expectation of a 3.1% rise.

“Japan is no longer the export powerhouse it once was.”

Jesper Koll, expert director at Monex Group.

Koll also acknowledged that while the yen has been weak, and the fear of tariffs could elevate exports through frontloading, China-made goods were replacing Japanese exports. According to him, it meant that “as U.S.-China trade wars escalate, Japan will be hurt even more as China will be forced to de-facto dump the capacity it used to sell to America onto global markets.”

Senior economic advisor to Japan’s Prime Minister Takeshi Niinami argued that while it’s difficult for Japan to invest in the U.S. given the current trade dynamics, he believes that U.S. productivity is much higher than other countries, which makes the market attractive. He noted that despite the trade policies, “we want to keep investing in the United States.”

Trump seems pleased after negotiations with Japan

The trade data also came in the wake of Japan’s trade negotiations with the U.S. Economic Revitalization Minister Ryosei Akazawa visited Washington yesterday and will stay until Friday to talk with U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer. Japan’s Chief Cabinet Secretary Yoshimasa Hayashi noted that the visit will be to “build a relationship of trust” between the two nations, with Japan requesting the U.S. to remove the tariff measures.

The president also mentioned that he was honored to have met with the Japanese Delegation on Trade, having earlier stated that he would be attending the trade meetings. He noted earlier that the talks will cover “tariffs, the cost of military support, and TRADE FAIRNESS.” Trump had also maintained that “hopefully something can be worked out which is good (GREAT!) for Japan and the USA!”

After the meeting, the Republican president posted: “A Great Honor to have just met with the Japanese Delegation on Trade. Big Progress!”

Japan’s Prime Minister Shigeru Ishiba highlighted on Thursday in Tokyo that his chief trade negotiator, Ryosei Akazawa, acknowledged that the talks in Washington were “very candid and constructive.” Ishiba also noted that the talks were not easy, but President Trump stated his intention to make the negotiation a top priority. “I believe we had talks that lead to a next step,” he added.

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