Japan has marked its fifth successive year of trade deficit in 2025, according to preliminary data released by the Finance Ministry on Thursday. The nation reported an annual shortfall of 2.65 trillion yen ($17 billion), representing a significant 53% reduction from the previous year’s deficit. While exports demonstrated modest growth of 3.1% throughout the year, imports remained nearly stagnant with less than 1% growth.
The December figures provided a temporary respite with a trade surplus of 105.7 billion yen ($669 million), though this represented a 12% decrease compared to the same month last year. Monthly data revealed exports growing at 5.1% while imports increased by 5.3% year-on-year.
Geographic analysis reveals shifting trade patterns, with December exports to the United States declining by 11% amid ongoing trade tensions. Conversely, Japan experienced export growth to Britain, African markets, and Asian hubs including Hong Kong and India. Import dynamics showed strength in European sourcing while declining from Brazil and Middle Eastern suppliers.
The trade landscape remains complicated by multiple geopolitical factors. The United States maintains a 15% tariff on most Japanese imports, representing a compromise from initially proposed 25% rates but still elevated from historical levels. Additionally, manufacturing sectors face potential disruption from China’s restrictions on rare earth exports, implemented following Prime Minister Sanae Takaichi’s comments regarding potential Japanese military response to Chinese actions toward Taiwan.
Despite these challenges, Japan’s economy demonstrates resilience with the benchmark Nikkei index reaching record highs, even as public concerns persist regarding inflationary pressures and wage stagnation.