Japan's exports to the United States fell for the first time in 17 months and Japanese business sentiment soured amid worries about US President Donald Trump's protectionist trade policies. Exports to the United States dipped 0.9 percent in June from the same period a year ago on waning shipments of cars and semiconductor manufacturing equipment, two of Japan's most important export products.
Thursday's trade data came on the heels of the Reuters Tankan, which showed business sentiment slipped in July, reflecting companies' fears about an intensifying trade dispute between the United States and China. The batch of data highlighted concerns among Japanese policymakers who worry Trump may resort to tariffs or other protectionist measures to fix trade imbalances with Japan under his "America first" policy.
The government cut its view of business sentiment and warned that it must be "vigilant" about the impact that Sino-US trade frictions could have on the global economy, which would in turn affect export-reliant Japan. "Overall exports remain healthy for now, but we are not sure how things are going to turn out on the trade policy front," said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley Securities. "It's possible talk of tariffs and trade friction could reduce corporate investment."
With Japanese imports from America down 2.1 percent, Japan's trade surplus with the United States widened 0.5 percent year-on-year to 590.3 billion yen ($5.24 billion). That could make it a potential target for Trump's protectionist policies. Japan's global exports rose 6.7 percent in June, while imports gained 2.5 percent.
The Reuters Tankan, which tracks the Bank of Japan's closely watched quarterly tankan survey, found manufacturers' sentiment index stood at 25 in July, down one point from June, and the service sector's mood fell to 34 from 35 in the prior month.
The index subtracts the percentage of companies that feel negative about the economy from those who are optimistic, so a positive number means more businesses are upbeat. Concerns about protectionism were widely cited in the Reuters poll of 483 large- and mid-sized companies, of which 268 responded between July 2-13. Exporters of cars, precision machinery and metal products were among those who dragged down manufacturers' sentiment.