Japan Trade Gap Narrows Sharply

Japan’s trade surplus narrowed to JPY 105.7 billion in December 2025 from JPY 120.3 billion in the same month a year earlier, missing market expectations for a JPY 357 billion gain, as imports grew a bit faster than exports. Imports climbed 5.3% year-on-year to an 11-month high of JPY 10,305.8 billion, extending gains for a fourth consecutive month and easily beating forecasts of 3.6%, highlighting solid domestic demand, underpinned by Tokyo’s large-scale stimulus package, the biggest since the pandemic and the first introduced under the Takaichi administration. Meanwhile, exports rose 5.1% to a record of JPY 10,411.5 billion, marking a fourth straight monthly increase, buoyed by strong year-end foreign demand and a weaker yen. However, the gain fell short of the consensus of 6.1%, as Japanese automakers continued to face a 15% U.S. tariff under the trade deal reached in September. In 2025, Japan logged a trade gap of about JPY 2.65 trillion, down 52.9% from the prior year.

Japan’s trade balance swung to a surplus of JPY 322.2 billion in November 2025 from a deficit of JPY 120.8 billion in the same month a year earlier, easily exceeding market forecasts of a gain of JPY 71.2 billion and marking the first surplus since June. Exports rose 6.1% year-on-year to JPY 9,714.7 billion, marking a third consecutive month of growth and outpacing forecasts of 4.8%. It also indicated the fastest pace of shipments since February, due to solid overseas demand for automobiles and capital goods, firmer exports to the U.S. and parts of Asia, and the yen’s relative weakness, which continued to enhance the price competitiveness of Japanese products abroad. Meanwhile, imports grew 1.3% to JPY 9,392.4 billion, marking a third straight month of expansion but falling short of estimates of 2.5%. The slowdown reflected softer domestic demand, particularly for consumer goods, alongside easing energy prices that curbed the value of fuel imports.

Japan’s trade deficit decreased significantly to JPY 231.8 billion in October 2025 from JPY 499.9 billion in the same month a year earlier, outperforming market estimates of a shortfall of JPY 280 billion. Exports rose 3.6% year-on-year to a seven-month high of JPY 9,766.3 billion, marking a second consecutive month of growth and outpacing forecasts for a 1.1% gain, though the pace eased from September’s 4.2% increase. The yen’s depreciation lifted the value of overseas shipments, partially cushioning the blow from U.S. tariffs. Meanwhile, imports rose 0.7% to a nine-month high of JPY 9,998.1 billion, pointing to a second straight month of increase and defying expectations for a 0.7% decline. The increase reflects front-loaded purchases ahead of winter, especially in energy and raw materials.