Japan’s trade deficit widened again in 2025, extending a streak that analysts have tied to tariff pressure and strain in regional diplomacy, according to preliminary government data released Thursday. The Finance Ministry reported a 2.65 trillion yen ($17 billion) deficit for the year, even as exports continued to rise and imports held roughly steady. The figures also pointed to a monthly swing the other way at the end of the year, with Japan recording a trade surplus in December.
For the full year, exports rose 3.1%, while imports remained about the same on year, gaining less than 1%, which helped narrow the annual shortfall. The government’s preliminary estimate still puts 2025 as Japan’s fifth straight year of deficits, and it comes in the context of U.S. tariff changes affecting Japan’s overseas sales.
In December, Japan logged a 105.7 billion yen ($669 million) trade surplus, the data showed. That monthly surplus was 12% smaller than what Japan recorded in the same month a year earlier, as both imports and exports increased from their year-ago levels—imports grew 5.3% and exports grew 5.1%, the Finance Ministry said.
By destination, exports to the United States fell 11% in December, the preliminary data showed. Exports to Britain, Africa and some other Asian countries rose, while imports from Europe were described as strong, underscoring that the year-end pattern varied by trading partner.
The U.S. tariff policy is a key part of the backdrop. The United States has imposed a 15% tariff on most imports from Japan—down from the 25% Trump initially proposed, but higher than the rate before he took office a year earlier—according to the report. The same report also cited a diplomatic rift with neighboring China as another factor complicating Japan’s trade performance.
Separately, Japan’s manufacturers face additional risk from China’s export controls on rare earths, the report said. It said Beijing announced the controls after Prime Minister Sanae Takaichi suggested that a Chinese move on Taiwan could prompt a Japanese military response, adding a geopolitical edge to the supply-chain pressure.
The trade and supply-chain challenges play out against a larger domestic backdrop in which the economy has “held up,” the report said. It noted that the benchmark Nikkei on the Tokyo Stock Exchange has continued hitting new records, even as the public has voiced concerns about rising prices and stagnant wages.