The data released on Wednesday (February 19th) showed that Japan's January export data performed well, with a fourth consecutive month of growth, mainly due to the strong performance of car exports to the United States. However, US President Trump's threat to impose high tariffs on imported cars may cast a shadow over Japan's future export prospects.

Strong export growth, but slower than expected

Data shows that Japan's exports in January increased by 7.2% year-on-year, which is lower than the market expectation of 7.9%, but significantly higher than the 2.8% in December. Exports to the United States increased by 8.1%, mainly driven by car sales and the weakening of the yen. However, exports to China decreased by 6.2% year-on-year, mainly due to the decline in exports of chip manufacturing equipment. In addition, imports in January increased by 16.7% year-on-year, far exceeding market expectations of 9.7%, resulting in a trade deficit widening to 2.759 trillion yen (approximately 18.16 billion US dollars), higher than the expected 2.1 trillion yen.

Trump's tariff threat poses the biggest risk

Economists warn that Trump's threat to impose a 25% tariff on imported cars could have a serious impact on Japanese exports. Automobiles are the core commodity of Japan's exports to the United States, accounting for 28% of the total exports to the United States. Daiwa Chief Research Economist Koki Akimoto pointed out that the impact of automobile tariffs will far exceed that of other goods, and future trade data may be under pressure as a result. At present, the tariff rate for passenger cars in the United States is 2.5%, while the tariff rate for pickup trucks is 25%. If tariff policies are implemented, major car manufacturers such as Toyota and Honda may be forced to adjust their global production layout.

Analysis of the Impact on the Japanese Yen

Short term bearish on the yen: Trump's tariff threat may weaken Japan's export competitiveness, leading to further expansion of the trade deficit and putting pressure on the yen.

Risk aversion support: If tariff policies escalate global trade tensions, market risk aversion may heat up, and the Japanese yen as a safe haven currency may receive some support.

Long term uncertainty: The uncertainty of tariff policies may suppress Japan's economic growth prospects, thereby affecting the long-term trend of the yen.

Summary: Export growth cannot hide hidden concerns, and tariff threat becomes a key variable

Despite Japan's strong export performance in January, Trump's threat of car tariffs could have a significant impact on future trade data. As the core commodity of Japan's exports to the United States, once cars are subject to high tariffs, it will directly affect the momentum of Japan's economic recovery. At the same time, the widening trade deficit and inflationary pressures may also suppress private consumption. In the future, the sustained recovery of the Japanese economy will largely depend on changes in the global trade environment, especially the direction of the US Japan trade relationship.