Japan's export growth slowed in February: Chinese holidays compounded by US tariffs, causing foreign demand to fall into a "double squeeze".

The growth rate of Japan's exports shows signs of slowing down, mainly due to two major factors: first, the direct pressure from the US tariff policy on Japanese car exports, and secondly, the seasonal decline in demand caused by the Chinese New Year holiday. According to data released by the Japanese Ministry of Finance on Wednesday, the total value of exports in February increased by only 4.2% year-on-year, a significant slowdown compared to the previous month, but still exceeding the market analysts' median forecast of 1.9%. Specifically, imports increased by 10.2% year-on-year, slightly below market expectations, leading to a trade surplus for Japan - with an unadjusted trade surplus of 57.3 billion yen. In February this year, during the Lunar New Year holiday, Japan's exports to China decreased by 10.9% year-on-year. Specifically, exports of semiconductor manufacturing equipment, plastics, and scientific optical equipment all showed double-digit declines, becoming the main drivers of the decline in exports to China. However, it is worth noting that due to strong demand related to artificial intelligence, shipments of semiconductors and other electronic components continue to show growth. Chief Economist at Mitsubishi UFJ Research and Consulting Co., Shinichiro Kobayashi, analyzed that the decline in exports to China was mainly due to the influence of the Lunar New Year holiday. He also emphasized that despite signs of a partial slowdown in the US economy, the overall global economic fundamentals remain stable, therefore Japan's overall exports continue to show growth. Looking at regional structure, exports to the European Union performed well, with a 14% year-on-year increase. Among them, exports of machinery for cars, construction, mining industries showed particularly significant growth, becoming the core driving force behind the growth in exports to the EU. At the same time these data were released, the global economy is facing chain reactions caused by the Middle East situation. The conflict that began at the end of February continues to escalate, and the rise in oil prices further increases global inflation risks. Recent economic data shows that although the depreciation of the yen provides some support to exporters, by the end of 2025, the net export contribution to the Japanese economy is still expected to be zero. Economist Shinichiro Kobayashi from Mitsubishi UFJ expressed strong concern about this: "The uncertainty of the Middle East situation casts a shadow over the outlook. The war could impact key shipping routes, and companies need to be vigilant about whether stable energy supply can be sustained." Japanese companies are continuing to deal with the impact of the US tariff policy, while the two countries are currently implementing a trade agreement reached last year - which sets the upper limit of US import tariffs on Japanese goods at 15%. As part of the agreement, Japan has promised to expand its investment in the US to support the revitalization of the US manufacturing industry. Specifically looking at the data for February, Japan's exports to the US fell by 8% year-on-year, with the main drag coming from car exports - in terms of value, car exports fell sharply by 14.8%. However, it is worth noting that in terms of export quantity, the decline in car exports is significantly smaller, indicating that Japanese manufacturers are continuing to defend their market share in the US under tariff pressure by actively lowering prices. As a core pillar of the $50 billion investment plan towards the US, Tokyo officially launched the first batch of investments last month - with a total fund injection of up to $36 billion into American oil, natural gas, and critical mineral sectors, becoming a significant substantial measure of the trade agreement between the two countries. Ahead of Japanese Prime Minister So Naoki's visit to Washington to meet with US President Trump this week, officials from both countries continue to negotiate investment details. According to sources, the second batch of investment projects may focus on next-generation nuclear technology. According to the latest statistics from the Japanese Ministry of Finance, the average exchange rate for the Japanese yen against the US dollar in February was 155.65, a devaluation of 0.7% compared to the same period last year, continuing the recent weak yen trend. Shinichiro Kobayashi analyzed this, saying: "The continuous weakness of the yen will inevitably increase the cost of importing oil and other energy sources, directly adding pressure to expand the trade deficit."