Japan's exports rose by 5.1% year-on-year in December, underscoring the resilience of the world's third-largest economy despite US tariffs and rising trade tensions with China, according to analysis published by ING THINK. Growth was driven primarily by strong semiconductor and electrical machinery shipments, even as automotive exports weakened and exports to the US declined sharply.
© Kuremo | Dreamstime
While the headline export figure fell short of market expectations of 6.1% growth, the composition of trade points to robust intra-regional demand. Exports of electrical machinery, including semiconductors, increased by 11.3%, providing the main uplift to overall shipments. By contrast, automotive exports, Japan's largest export category, fell by 5.4%, reflecting the impact of US tariffs.
Trade performance varied significantly by destination. Exports to Asia rose by 10.2% and shipments to the EU increased by 2.6%, while exports to the US fell by 11.1%. Within Asia, trade linked to the semiconductor supply chain was particularly strong, with exports to Taiwan up 20.7%, Malaysia up 16.7% and Vietnam up 13.7%. Imports also increased, rising 5.3% year-on-year in December.
ING notes that ongoing tensions between Japan and China appear to have influenced trade flows, with evidence of front-loading ahead of potential tightening of trade controls. Exports to China rose 5.6% in December, led by chemicals (up 6.0%) and electrical machinery (up 9.2%). Imports from China surged 14.7%, with especially strong growth in electrical machinery, including semiconductors (up 52%) and telephony and telegraphy equipment (up 96.6%).
Looking ahead, ING expects strong global semiconductor demand to continue supporting Japanese exports. However, exports to China are likely to slow as Beijing has tightened export rules for Japan, while a moderation in US consumption is expected to limit any rebound in exports to the American market.
The trade data come ahead of the Bank of Japan's upcoming policy meeting, where ING expects the central bank to keep its policy rate unchanged at 0.75%. While the BoJ is likely to revise its GDP outlook upwards, it is expected to remain cautious, balancing trade tensions with China, geopolitical risks and the impact of a weaker yen on domestic inflation.
ING anticipates that inflation will ease "quite meaningfully" in the first quarter of 2026, prompting the Bank of Japan to maintain its current stance and avoid rapid rate hikes that could undermine the economic recovery.
More information:
ING
www.think.ing.com
