Japan’s Ministry of Finance released its latest trade statistics on Thursday, January 22nd, showing a 5.1% year-on-year increase in December’s export value. This growth is attributed to the continued depreciation of the Japanese yen, bringing price advantages, and a revival in demand from some overseas markets. However, a significant decline in exports to the United States offset some of this growth momentum.
The statistics reveal that Japan’s total exports in December 2025 amounted to 10.4 trillion yen (approximately $657.6 billion), while imports reached 10.3 trillion yen (about $650.8 billion), both increasing by 5.1% and 5.3% respectively compared to the previous year. The average exchange rate for the month was 155.86 yen to 1 US dollar, representing a 2.2% depreciation of the yen compared to the same period last year, providing certain support to export figures.
Due to imports growing slightly faster than exports, Japan’s trade surplus narrowed to 105.7 billion yen in December, a 12.1% decrease from the same period the previous year. Nevertheless, the trade surplus was maintained for the second consecutive month.
In terms of product categories, exports were driven mainly by electronic components such as semiconductors and non-ferrous metals, while imports saw significant growth in communication equipment and pharmaceuticals.
With regards to major trading partners, Japan’s exports to the United States in December decreased by 11.1% compared to the previous year, reaching 1.81 trillion yen. This decline, combined with a 9.2% increase in imports, resulted in a reduced trade surplus with the US, down by 31.7% to 690.6 billion yen. Factors contributing to the drop in exports to the US included decreased shipments of automobiles and parts, as well as semiconductor manufacturing equipment.
Exports to the European Union saw a minor growth of 2.6%, but a substantial 21.6% increase in imports widened the trade deficit to 256.7 billion yen, marking 23 consecutive months in deficit. Overall, Asia maintained a trade surplus, with exports and imports growing by 10.2% and 9.6% respectively.
Japan’s trade structure with China continued to face pressure, with exports to China increasing by 5.6% in December to 1.81 trillion yen, while imports surged by 14.7% to 2.46 trillion yen. This widened the trade deficit with China to 652.5 billion yen, a 50.5% increase year-on-year, marking 57 consecutive months in deficit. The import increase in raw materials, semiconductor-related products, and pharmaceuticals were cited as the primary reasons for the deficit expansion.
Analysts from Reuters pointed out that Japan’s recent export performance has been supported by multiple factors, including the sustained weakening of the yen enhancing price competitiveness, the resilience of the US economy, and the trade agreement reached between Japan and the US in September last year. The agreement set a 15% benchmark tariff on almost all goods, allowing businesses to adjust their supply and sales strategies in a predictable tariff environment. Despite the decline in exports to the US in December, the overall tariff impact was lower than previously feared.
Against this backdrop, the Japanese government has revised its economic growth forecast for the current fiscal year (ending in March) from 0.7% to 1.1%, reflecting official confidence in both domestic demand and export prospects.
To address inflationary pressures resulting from the yen’s depreciation and improvements in wage growth prospects, the Bank of Japan raised its policy rate by 25 basis points to 0.75% in December 2025, reaching a 30-year high.
Market expectations suggest that the central bank will maintain interest rates at this level during the two-day monetary policy meeting ending on Friday, January 23rd, but may signal further rate hikes to continue managing inflation risks.