Japan’s exports accelerate in May

TOKYO: Japan’s exports rose in May at the fastest rate in four months thanks to increased shipments of cars, car parts, and semiconductor equipment, a sign that global demand is gaining strength.

Exports rose 8.1% in May from the same period a year ago, more than the median estimate for a 7.5% annual increase expected by economists in a Reuters poll. In April, exports grew an annual 7.8%.

Exports are likely to continue to grow thanks to increased demand for manufacturing equipment, cars and car parts, but Japan’s trade surplus with the United States makes it a potential target for US President Donald Trump’s protectionist policies.

Japan’s exports to the United States rose 5.8% year-on-year in May, faster than a 4.3% year-on-year in April, due to higher shipments of car parts.

Imports from the United States rose 19.9% year-on-year as imports of US aircraft and coal grew.

As a result, Japan’s trade surplus with the United States fell 17.3% year-on-year to 340.7 billion yen ($3.08 billion), the lowest such surplus since January 2013.

The decline in the trade surplus with the United States is unlikely to exempt Japan from White House criticism as President Donald Trump’s administration raises tariffs to lower the US trade deficit and combat what it says are unfair trade policies.

Trump is pushing ahead with hefty tariffs on $50 billion of Chinese imports, and China’s Commerce Ministry has said it would respond with tariffs “of the same scale and strength,” and that any previous trade deals with Trump were “invalid” sparking fears of a full-blown trade war.

Trump on Friday laid out a list of more than 800 strategically important imports from China that would be subject to a 25% tariff starting on July 6, including cars, the latest hardline stance on trade by a US president who has already been wrangling with allies.

The official Xinhua news agency said China would impose 25% tariffs on 659 US products, ranging from soybeans and autos to seafood.

China’s retaliation list was increased more than six-fold from a version released in April, but the value was kept at $50 billion, as some high-value items such as commercial aircraft were deleted.

Trump has imposed tariffs on steel and aluminium imports, which affect Japanese companies, and has also criticised Japan for its low level of imports of American vehicles.

“Exports will continue to recover, but I am a little worried about the pace of growth,” said Shuji Tonouchi, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

“Friction between the United States and China on trade policy could impact Japan. This is a risk factor for Japan and for global trade.”

In terms of volume, which strips out the impact of currency moves, Japan’s exports rose an annual 4.2% in May versus a 4.6% annual increase in the previous month.

Japan’s overall imports rose 14.0% in the year to May, versus the median estimate for an 8.2% increase, due to the rising price of oil.

The trade balance was a deficit of 578.3 billion yen ($5.23 billion), versus the median estimate for a 235.0 billion yen deficit.