Japan Records Fifth Consecutive Annual Trade Deficit in 2025

Japan's Trade Deficit Persists for Fifth Consecutive Year

Tokyo, Japan – Japan recorded a trade deficit for the fifth consecutive year in 2025, with government data released on Thursday, January 22, 2026, by the Ministry of Finance showing a total deficit of 2.65 trillion yen. This figure, equivalent to approximately $16.7 billion, represents a significant improvement, being 52.9% smaller than the deficit reported in the previous year.

Annual Figures and Trend

Despite the persistent deficit, Japan's total exports reached a record high in 2025, growing 3.1% from the year prior to 110.45 trillion yen. This marks the fifth consecutive year of export growth. Imports also saw an increase, edging up 0.3% to 113.10 trillion yen, marking their second consecutive annual rise. The narrowing of the overall deficit indicates a shift in the balance between these two components, even as the country continues to import more than it exports annually.

Factors Influencing the Trade Balance

Several factors contributed to Japan's trade performance in 2025. Exports were notably impacted by U.S. President Donald Trump's tariffs, which imposed a 15% levy on most imports from Japan. This led to a decline in U.S.-bound shipments for the first time in five years, with vehicle exports to the U.S. plunging by 11.4%. Furthermore, a diplomatic rift with neighboring China and Beijing's curbs on rare earth exports also affected Japanese manufacturing. Japan's trade deficit with China specifically widened by 22.7% to 7.91 trillion yen. While a weaker yen typically boosts exports by making them cheaper, it simultaneously inflates the cost of imports, particularly energy, contributing to the overall deficit.

December Performance and Broader Economic Context

In a monthly snapshot, Japan recorded a trade surplus of 105.7 billion yen in December 2025. However, this monthly surplus was narrower than that of the previous year. Despite the ongoing trade deficit trend, the broader Japanese economy has shown resilience, with the benchmark Nikkei on the Tokyo Stock Exchange reaching new record highs. This occurs even as the public expresses concerns over rising prices and stagnant wages.