Japan’s exports in the last fiscal year rose to a record high, as surging demand tied to artificial intelligence helped offset weaker auto shipments hit by U.S. tariffs.
The Nikkei newspaper reported on the 23rd that Japan’s exports in fiscal 2025 totaled 113.2422 trillion yen, up 4.0% from the previous year and the highest on record. Trade statistics released by Japan’s Finance Ministry on the 22nd showed auto exports fell 3.6% to 17.6674 trillion yen. Exports to the United States dropped 15.9%, turning down for the first time in five years. The report attributed the decline to tariff hikes under the Donald Trump administration, saying companies lowered prices to absorb the added costs.
AI-driven demand supported shipments elsewhere. The report said demand rose across Asia, including Taiwan, for semiconductor manufacturing equipment, data center cooling systems and electronic components. Exports of materials such as nonferrous metals processed in Japan and copper scrap also increased. Exports to Asia climbed 6.7% to 61.9374 trillion yen. Japan’s trade deficit narrowed to 1.7144 trillion yen, an improvement of 68.4% from a year earlier, the report said.
Still, higher energy prices linked to instability in the Middle East were cited as a key risk. Koya Miyamae, a senior economist at SMBC Nikko Securities, said the impact of rising crude prices would be reflected in earnest from April. If oil holds around $100 a barrel, Japan’s fiscal 2026 trade deficit could widen to about 15 trillion yen, the report said. Benchmark WTI crude had been in the $60 range before U.S. and Israeli strikes on Iran, then rose and has recently traded around $90. With Japan heavily dependent on oil imports, higher import costs could directly weigh on the trade balance.
Middle East risks could also affect exports. Some Japanese automakers have begun adjusting production of vehicles for the region or changing destination markets, the report said. The Middle East has been a key growth market for Japanese auto exports; shipments there in 2025, measured from January to December, totaled 2.4483 trillion yen, a record high. The latest figures underscore a shift in Japan’s economic center of gravity from traditional manufacturing toward semiconductors and data infrastructure, the report said.
* This article has been translated by AI.
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