Trade War Affects Japan: Exports Fall in September for First Time Since 2016
USA – October 18, 2018
Global growth in 2018 has become less even and broad-based than it was amidst the synchronized upswing last year. The United States remains a bright spot in the global economy, with growth having accelerated in the second quarter, but there are signs that economic activity may be slowing in other key regions (the euro area; China, Japan) while many emerging markets have come under pressure from rebounding commodity prices, rising interest rates, and shifts in sentiment.
Japan recorded a trade surplus for September of $1.2 billion, but exports fell 1.2% from the previous year, in the first decline for the world's third largest economy since 2016.
Surely there was an impact from a series of natural disasters (during the month, a major earthquake hit the northernmost island of Hokkaido, causing fatal landslides and widespread blackouts, while a typhoon struck the western Kansai area and temporarily shut down a major airport. Those events followed deadly flooding in southwestern Japan and a quake in Osaka earlier this year), but the lag in exports also reflects uncertainties over the trade war between the US and China after President Donald Trump imposed penalty tariffs on billions of dollars' worth of Chinese exports. Weaker US-China trade generally hurts the export-dependent Japanese economy. Imports rose 7% according to data released Thursday by the Ministry of Finance.
The last time Japan's exports fell during an on-year was in November 2016, when they slipped 0.4%, data shows.
For the six months through September, the first fiscal half of the year, exports grew 5.2% while imports rose 10%.
Junichi Makino, an analyst with SMBC Nikko Securities, said one factor behind the numbers was the recent rise in oil prices, which boosts the value of Japan's imports. Japan imports almost all its oil. But Makino said the volume of global trade was holding up overall despite the trade war between China and the US.
On Wednesday, the Trump administration announced its intent to withdraw from a little-known United Nations agency that governs global postal rates, another move against international institutions the president has long accused of hurting the US. The decision was borne out of frustration with discounts imposed by the Universal Postal Union (UPU) that allow China and some other nations to ship products into the US at cheaper rates than American companies receive to ship domestically.
Also, the Trump administration intends to pursue trade agreements with the European Union and Britain, as well as Japan. The administration recently reached a deal with Canada and Mexico to revamp the North American Free Trade Agreement.