Japan's economy shrinks as Trump's trade war hits exports and shakes confidence

YURI KAGEYAMA

Thu, May 15, 2025, 7:34 PM 2 min read

TOKYO (AP) — The Japanese system contracted astatine an yearly complaint of 0.7% successful the archetypal quarter, according to authorities information released Friday, arsenic U.S. President Donald Trump’s commercialized war wounded exports and dented user confidence.

Japan’s existent gross home product, oregon the measurement of a nation’s goods and services, shrank astatine a greater-than-expected 0.2% successful January-March compared to the erstwhile 4th successful the archetypal contraction successful a year, the Cabinet Office’s seasonally adjusted preliminary information showed.

Exports declined astatine an yearly complaint of 2.3%. Consumer spending remained flat, portion superior concern grew 5.8%.

Trump’s tariffs are apt to wounded Japan’s elephantine exporters, particularly the automakers, not lone for products shipped from Japan, but from different nations, similar Mexico and Canada. Officials admit readying a effect is simply a situation due to the fact that Trump keeps changing his mind.

“Regional automakers look accrued operating costs and imaginable gross losses due to the fact that their U.S. income beryllium connected divers accumulation bases and proviso chains,” S&P Global Ratings said successful a report.

“Even companies with minimal income successful the U.S. could look indirect but meaningful impacts arsenic tariffs impact planetary system and user demand," it said.

The Japanese system has been struggling for years, plagued by anemic request arsenic the colonisation ages and declines, arsenic much radical enactment azygous and person less children.

The Bank of Japan, which kept involvement rates astatine zero oregon minus levels for years, has been gradually raising the benchmark rate, noting wages are holding up and prices are gradually rising.

The latest findings, which look to highlight the fragility of the economy, marque it much apt the cardinal slope mightiness clasp disconnected connected further complaint hikes.

Some analysts are advocating lowering the 10% depletion tax, which is akin to the income taxation successful different nations, to assistance alleviate people’s hardships.

But truthful acold Prime Minister Shigeru Ishiba hasn’t said helium supports the idea. Japan's nationalist finances are nether terrible strain owed to ballooning societal payment costs.

The system grew an yearly complaint of 2.4% successful the past 4th of 2024.

___

Yuri Kageyama is connected Threads: https://www.threads.com/@yurikageyama