Japan’s December Exports Growth Plummets to 5.1%: A Shocking Disappointment That Shakes Economic Confidence

Vehicles positioned for shipment were seen in front of the Dream Angel vehicle carrier at Nagoya Port, Japan, on Tuesday, June 18, 2024. Recent trade data indicates that Japan’s export growth for December 2025 fell short of expectations, recording a 5.1% year-on-year increase. Analysts surveyed by Reuters had predicted a steadier growth rate of 6.1%, matching November’s figures. The disappointing results were largely attributed to a double-digit decline in shipments to the United States.

Throughout 2025, Japanese exports encountered challenges, particularly mid-year due to concerns over U.S. tariffs. However, a trade deal announced towards the end of the year, which reduced tariffs to 15%, sparked a brief rebound. December 2025 saw U.S. exports drop by 11.1%, following an encouraging 8.8% rise in November-marking the first uptick in U.S. shipments since March.

Exports to mainland China, Japan’s largest trading partner, increased by 5.6%, while shipments to Hong Kong surged by an impressive 31.1% compared to the previous year. Overall, exports to the broader Asia region rose by 10.2%. Imports also saw a significant jump in December, rising 5.1% year-on-year, markedly higher than the 1.3% increase recorded in November and surpassing the forecasted 3.6% rise.

For the entirety of 2025, Japan’s exports recorded a modest increase of 3.1%, a decline from the more robust 6.2% growth seen in 2024. Notably, exports to the U.S. and China-Japan’s two top trading partners-declined by 4.1% and 0.4%, respectively. In contrast, shipments to Hong Kong and Taiwan rose sharply, contributing 17.8% and 15.1% growth for the year, partially compensating for the downturn in exports to the U.S. and China.

Stefan Angrick, head of Japan at Moody’s Analytics, explained that the overall growth in exports was bolstered by U.S. shipments being front-loaded ahead of anticipated tariff increases, alongside a surge in electronics and machinery exports due to an AI boom, with a weaker yen further supporting export competitiveness. However, Angrick cautioned, “Although shipments are holding up for now, the outlook is fraught with risks,” pointing to rising U.S. import levies and intensifying foreign competition affecting industrial production and export volumes. Additionally, trade tensions with China present further challenges.

Relations between Japan and China have soured since November, following remarks from Prime Minister Sanae Takaichi suggesting military intervention if China were to threaten Taiwan. In response, China imposed restrictions on seafood imports from Japan and announced controls on the export of dual-use goods to Japan earlier this year.

This trade data arrives amid political uncertainty in Japan, as Prime Minister Takaichi has called for snap elections on February 8, with the Lower House set for dissolution. A victory for Takaichi is anticipated to streamline her fiscal agenda in parliament with minimal opposition, potentially involving measures to maintain a weak yen to bolster exports. Following the election announcement, Japanese markets have shown signs of heightened activity, driven by what analysts describe as the “Takaichi trade,” leading to an uptick in stocks and ongoing yen weakness.

Original Source: https://www.cnbc.com/2026/01/22/japan-trade-data-december-exports-imports.html
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Publish Date: 2026-01-22 10:02:00