The Japanese Economic Output Declines as Exports Suffer by American Trade Duties
The Japanese economic system has shown a contraction for the initial time in a year and a half, mainly caused by declining overseas shipments due to recent US tariffs.
Group of Seven Economic Rankings
The Japanese economy has become the first Group of Seven nation to announce an economic contraction in the latest quarter.
As the US yet to publish its GDP figures for Q3 2025, the present Group of Seven growth leaderboard show:
- France: 0.5 percent expansion
- United Kingdom: 0.1 percent
- Canada: 0.1 percent (provisional estimate)
- German economy: zero growth
- Italian economy: 0%
- Japan: -0.4%
Tourism Shares Slump during Diplomatic Rift with China
Alongside the economic contraction, Japan is experiencing an intensifying political conflict with China regarding Taiwan.
Stocks in Japan's tourism and retail companies have dropped noticeably after China advised its citizens to avoid visiting to Japan.
This decision by Beijing escalated a political dispute that was triggered by comments from Tokyo's new PM about the possibility of sending troops in the event of a potential Chinese attack on Taiwan.
The situation led to a surge of selling across Japan's tourism-related stocks.
- The Tokyo Disneyland operator stock dropped by 5.7 percent
- The department store chain tumbled by 11.3%
- The national carrier declined by 3.75 percent
"The ongoing dispute over Taiwan and China's travel warning advising against travel to Japan creates short-term difficulties for retail and hospitality sectors.
"Chinese visitors represent roughly 25 percent of Japan's international visitors, making retail outlets, luxury retail, and hospitality especially at risk."
Economic Decline Details
Japanese GDP dropped by 0.4 percent in the third quarter, as manufacturers' exports were affected by duties levied by the US recently.
Overseas shipments were a key factor of the decline, dropping by 1.2 percent compared with the April-June quarter, and were 4.5 percent lower than a year ago.
Earlier this year, the US administration had proposed Japan with a additional 25% tariff on its goods, which was later lowered to 15 percent when the two countries reached a trade deal.
Private demand also declined, by 0.3 percent compared to the previous quarter.
On an annual basis, Japan's GDP shrank by 1.8% in the three months through September.
"The Japanese economic situation was stable in the first half of this year and today's GDP data showed that growth is paused temporarily.
I expect Japan's economy to be back on a gradual growth trend going forward."
The White House has lately acknowledged the effect of tariffs on US consumers, reducing duties on food imports including meat, tomatoes, coffee and fruits amid growing concerns about rising costs.
Economic Agenda
- 8am GMT: Switzerland GDP report for Q3
- 15:00 Greenwich Mean Time: US construction spending data for August