TOKYO (Reuters) – 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.
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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.
The data highlighted concerns among Japanese policymakers who worry Mr Trump may resort to tariffs or other protectionist measures to fix trade imbalances with Japan under his “America first” policy.
With American imports 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 Mr Trump’s protectionist policies.
Japan’s global exports rose 6.7 percent in June, while imports gained 2.5 percent.
“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. “Its possible talk of tariffs and trade friction could reduce corporate investment.”
The United States this month imposed 25 percent tariffs on $34 billion of Chinese goods to lower the US trade deficit, and China quickly retaliated with an increase in tariffs on US goods.
“Our clients are increasingly taking a wait-and-see stance on capital expenditure in the face of uncertainty over trade friction between the United States and China and the EU,” a manager of a machinery maker wrote in the survey.
“Uncertainty is rising over capital spending plans at our client firms due to the expansion of protectionist policies and geopolitical risks,” said another machinery maker.
Still, the mood among non-manufacturers improved slightly and big firms’ solid capital spending plans offered some relief.