(Feb 18): Japan’s exports rose at the fastest clip in more than three years as demand for chips related to artificial intelligence (AI) offset sluggish car shipments to the US, in data that were helped somewhat by the Lunar New Year effect.
The value of overall exports gained 16.8% in January from a year earlier, the sharpest increase since November 2022, the Finance Ministry reported Wednesday. That beat the median analyst forecast of a 13% rise. Overall shipments of semiconductors and other electronic components rose by almost 40%, led by a 51.7% jump in those exports destined for China.
The figures come against a backdrop of growing optimism over the outlook for international commerce at the World Trade Organization (WTO). The WTO’s director general said last month that the rapid acceleration of AI may underpin global merchandise trade this year, helping overcome US tariff headwinds.
“Some semiconductor related shipments are showing strength and that’s probably the benefit of rising AI demand,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “The data confirm little impact from US tariffs as a weak yen is helping Japanese exporters.”
The data show that goods exports continue to pick up as companies work around the impact of US tariffs, which eased somewhat following a trade deal last year. Japan and the US are working to implement Tokyo’s pledge to increase investment in the US, a key provision of the agreement that reduced tariffs on US imports of Japanese cars.
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Tokyo plans to invest US$36 billion in US oil, gas and critical mineral projects, the first tranche of the US$550 billion commitment. Those plans, announced overnight, come ahead of Japanese Prime Minister Sanae Takaichi’s planned visit to Washington for a meeting with US President Donald Trump in March.
By region, exports to China rose by 32%, while those destined for the EU increased 29.6% and those to the US fell 5%. The figures for China were distorted by the Lunar New Year factor, as the holidays fell in January a year ago.
“Some special factors are at play, including front loading before the Chinese New Year, so Japan’s exports aren’t as strong as the headline figure suggests,” Minami said. “But it’s probably safe to say they’re recovering gradually.”
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The value of auto shipments to the US fell 9.9%, while the number of vehicles shipped declined by only 0.8% from a year earlier. The gap suggests Japanese carmakers faced with Trump’s tariffs are continuing to sacrifice profits in order to maintain market share in the US through price cuts. There’s a risk that narrowing profit margins resulting from the strategy may limit the firms’ capacity to raise wages at home.
While the yen was largely unchanged from levels a year ago, limiting its impact on the latest data, the currency remains weak by historical standards, providing support to exports. Japan’s currency averaged 156.91 to the dollar in January, 0.2% stronger than in the same month last year, according to the ministry.
The US dollar was little changed around 153.20 after the data Wednesday morning in Tokyo, compared with a 20-year average of 111.93.
“Exports won’t be rising at this rapid pace, and it’s unlikely to be a driving force for Japan’s overall economy,” Minami said. “It’s vital for consumer spending to pick up as inflationary pressures are expected to ease.”
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