Japan’s exports decreased in December 2025, rising 5.1% year over year, below expectations. The main reason was a sharp decline in exports to the United States, which fell 11.1% after rising in November for the first time since March. This unexpected drop between Japan and the U.S. is still unbelievable, even though both countries agreed to lower U.S. tariffs to 15%. By the end of the year, Japan’s overall export growth had weakened.
Exports to other Asian countries helped reduce the impact of lower demand from the U.S.
Shipments that go to China, Japan’s largest trading partner, rose 5.6% in December, while shipments to Hong Kong increased by 31.1%. Shipments that go to other parts of Asia also increased by 10.2%, showing stronger demand in the region. At the same time, Japan’s imports rose 5.1% year on year, well above the 1.3% increase in November and more than expected, suggesting stronger domestic demand and higher import costs.
In 2025, Japan’s exports grew 3.1%, down from 6.2% in 2024. Exports to the U.S. and China decreased by 4.1% and 0.4%, respectively, thereby lowering overall growth. However, exports to Hong Kong and Taiwan rose 17.8% and 15.1% in 2025, providing Japan with some relief from losses.
You Might Also Like: China AI Chip Firms Raise Billions In Hong Kong Tech Race
Research says Japan’s export growth in 2025 was helped by companies sending goods early to avoid possible tariff increases, strong demand for products related to Artificial Intelligence, and a weak yen, which made Japanese goods cheaper and more appealing to buyers in other countries. However, there are still many risks, including higher trade barriers, strong competition from other countries, and worsening trade tensions with China. After all of this, Japan prepares for early elections in February. Still, the markets are positive because investors believe that Prime Minister Sanae Takaichi will continue the policies that will help exporters and keep the yen weak.
