Japan’s goods trade surplus plunged 90.3 percent in April from a year earlier to ¥60.4 billion ($546 million), as exports to China remained weak on the back of U.S.-China trade tensions, government data showed Wednesday.
The result represented the third straight month of black ink, according to a preliminary report by the Finance Ministry.
Exports fell 2.4 percent to ¥6.66 trillion, down for the fifth consecutive month, due to a slump in shipments of chipmaking equipment to China, underlining the growing threat to the world’s third-biggest economy from a bruising Sino-U.S. trade war, while imports rose 6.4 percent to ¥6.60 trillion on a rise in crude oil prices.
Data also showed Japan’s trade surplus with the United States rose for a second month, as auto exports accelerated, which could draw U.S. President Donald Trump’s ire before U.S.-Japan trade negotiations begin this week followed by a leaders summit a few days later.
China-bound exports, including semiconductor manufacturing equipment and auto parts, dropped 6.3 percent from a year earlier, marking a decline for the second consecutive month. Imports from the world’s second-largest economy climbed 5.9 percent, leaving Japan with a deficit of ¥318.3 billion.
Among other trading partners, Japan’s trade surplus with the United States expanded 17.7 percent to ¥723.2 billion.
With the European Union, Japan had a surplus of ¥3.4 billion, supported by auto exports to Belgium.
Against Asian countries including China, Japan’s surplus dropped 36.8 percent to ¥450.1 billion.
U.S. Trade Representative Robert Lighthizer will visit Japan on May 24 to meet economic revitalization minister Toshimitsu Motegi to accelerate trade talks ahead of a leaders summit a few days later, according to two sources with direct knowledge of the plan.
Trump angered foreign automakers by declaring that some imported vehicles and parts posed a national security threat, and Tokyo fears the U.S. government could attempt to set a quota on Japanese car imports.
The specter of a drawn-out trade war comes at a delicate time for Japan’s economy.
Gross domestic product data out Monday showed Japan’s growth unexpectedly accelerated in January to March because imports fell more than exports, suggesting domestic consumption was weakening at the same time that external demand had turned down. The GDP data showed declines in consumer and business spending, a bigger source of concern as companies worried about the future.
Last month, imports rose 6.4 percent year on year from a 1.2 percent gain in March, thanks to increases in oil and related purchases.
Faltering overseas demand and weak consumer spending could keep policymakers under pressure to forego a twice-delayed tax hike in October, although a rebound in manufacturers’ confidence may ease some fears of a recession in the world’s third-largest economy.
Investors are closely watching the government’s monthly report, due later this week, for a possible downgrading of its view that the economy is in a gradual recovery, which would rekindle speculation about a tax hike delay.
However, there are some positive signs for the economy.
Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 3.8 percent in March, separate data on Wednesday showed.
Furthermore, manufacturers surveyed by the Cabinet Office forecast core orders to jump 15.7 percent in April to June after a 3.2 percent decline in the previous quarter.
In Japan, a sales tax increase to 8 percent from 5 percent in April 2014 hit consumers hard and triggered a sharp economic slump.
Since then, Abe has twice delayed the planned tax hike to 10 percent, as he has prioritized economic growth over fiscal reforms, despite the industrial world’s heaviest public debt burden, which sits at twice the size of Japan’s $5 trillion economy.