Japan's economy contracts as exports get hit by US tariffs

Published: Monday, November 17, 2025 at 1:27 am

Japan's Economy Shrinks Amidst US Trade Tensions

TOKYO - Japan's economy experienced a contraction in the July-September period, according to government data released Monday. The annualized rate of decline was 1.8%, reflecting a downturn in the nation's exports. This marks the first contraction in six quarters for Japan's Gross Domestic Product (GDP), which decreased by 0.4% on a quarter-by-quarter basis.

The primary driver of this economic downturn was a significant drop in exports, which fell by 1.2% compared to the previous quarter. This decline is largely attributed to tariffs imposed by the United States. Some businesses had previously accelerated exports to avoid the tariffs, potentially inflating earlier export figures. On an annualized basis, exports decreased by 4.5% during the three-month period ending in September.

Imports saw a slight decrease of 0.1% during the third quarter. Meanwhile, private consumption, a key indicator of consumer spending, edged up by a modest 0.1% during the same period.

The tariffs imposed by the US have significantly impacted Japan's export-dependent economy. Major industries, such as the automotive sector, are particularly vulnerable. While some manufacturers have shifted production overseas to mitigate the effects of tariffs, the impact is still being felt. The US currently levies a 15% tariff on a substantial portion of Japanese imports, a reduction from the previous 25%.

Political uncertainty also played a role in the economic climate. Sanae Takaichi became prime minister in October.

BNN's Perspective: The economic contraction in Japan highlights the complex consequences of global trade disputes. While the reduction in tariffs is a positive development, the overall impact of trade tensions on export-oriented economies like Japan remains a concern. Policymakers will need to carefully navigate these challenges to ensure economic stability and growth.

Keywords: Japan economy, GDP, exports, tariffs, US tariffs, economic contraction, imports, private consumption, trade, Sanae Takaichi, Toyota Motor Corp.

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