Japanese export values posted a seventh straight year-on-year rise in April but the global trade war launched by the United States led the pace of increase to decelerate further to 2.0% (vs. consensus +3.1%) from a revised 4.0% in March, 11.4% in February and 7.3% in January. Higher shipments of computer chips, food and drugs were partly offset by declines in automobiles as well as iron and steel, hit by Trump tariffs on imports. Exports of ships also dropped.

Import values slipped back 2.2% (vs. consensus -3.9%) after rebounding a revised 1.8% in March on a 0.7% dip the previous month. The decrease was led by lower purchases of coal, crude oil and aircraft as seen the previous month. The prices for crude oil and other materials have eased on dimmer global growth prospects while a firmer yen on waning U.S. currency safe-haven status has lowered import costs.

The trade balance marked a deficit of ¥115.85 billion (vs. consensus ¥191.30 billion in surplus) for the first shortfall in three months (the eighth in 12 months) following a revised ¥559.43 billion surplus in March and narrowing from a ¥504.69 billion deficit seen in April 2024. The deficit was not entirely unexpected. NLI Institute Chief Economist Taro Saito, who often accurately predicts trade figures, had called for a deficit of ¥140.50 billion, which was at the bottom of the economist forecast range, with the highest being a surplus of ¥343.80 billion.

Exports to the United States, which is the largest market for Japanese exports, dipped 1.8% on year after +3.1% in March, marking their first drop in four months (down for a fifth straight month through December 2024).

Those to the European Union slipped 5.2% (vs. -1.1% the previous month) for the fourth drop in a row while shipments to China fell 0.6% after falling 4.8% in March and marking the first gain in three months in February (vs. +14.1%).

Japanese export values are forecast to post a seventh straight year-on-year rise in April, up 3.1%, after rising 3.9% in March (economist forecasts ranged widely from a 0.6% drop to a 8.5% gain). The increase is expected to be led by solid demand for computer chips, ships and drugs. By contrast, exports of automobiles as well as iron and steel are seen down, hit by the Trump administration’s stiff tariffs on imports from many U.S. trading partners, but the full impact of the global trade war is likely to be seen in May data onward.

Import values are expected to slip back 3.9% after rebounding 2.0% in March on a 0.7% dip the previous month. The decrease was likely led by lower purchases crude oil, coal and aircraft as seen the previous month, judging from the Ministry of Finance trade data for the first 20-days of April. The prices for crude oil and other materials have eased on dimmer global growth prospects while a firmer yen on waning U.S. currency safe-haven status has lowered import costs. The yen appreciated to an average ¥144.39 against the dollar in April during Tokyo trading hours from a recent bottom of ¥156.49 in January 2025 and from ¥153.43 in April 2024, Bank of Japan data showed.

The trade balance is forecast to post a surplus of ¥191.30 billion, shrinking from a revised ¥559.43 billion surplus in March but widening from a ¥504.69 billion deficit in April 2024. It would be a third straight monthly positive figure and a fifth surplus in 12 months. There is a slight possibility of Japan posting a trade deficit on weak exports in April.

Merchandise Trade balance measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.

Japan's merchandise trade balance measures visible trade and excludes services. Specifically it is the difference between imports of goods and exports of goods. A positive value indicates a trade surplus (exports exceed imports) while a negative value indicates a trade deficit (imports exceed exports). Movements in the trade balance reflect altered demand for Japanese exports which subsequently impact the yen's value and directly affect GDP growth because of the economy's dependence on trade.

The report gives insight into changing trends regarding Japanese trade. Such developments are especially important for Japan, which is an export-oriented economy that has historically experienced large trade surpluses and any change can have a dramatic effect on the domestic economy. Typically the headline number is the change from the previous year in yen along with the percentage change in exports and in imports from the previous year.