Japan exports beat forecasts with 4.2% growth in February, but shipments to China and U.S. slump

Japan’s exports climbed 4.2% from a year earlier in February, marking a sharp slowdown after hitting an over-three-year high in January.

However, the increase was higher than the 1.6% rise expected by economists polled by Reuters, and against the 16.8% jump in the previous month.

Exports to mainland China, Japan’s largest trading partner, fell 10.9%, while shipments to the U.S. dropped 8%. The total value of auto exports to the U.S., Japan’s biggest export item, fell 14.8%.

Tokyo’s exports to Washington may weaken further after the U.S. announced Section 301 investigations that could lead to the reimposition of tariffs.

This comes after Trump’s “reciprocal” tariffs were struck down by the Supreme Court in February.

Despite a drop in exports to its top trading partners, other Asian economies picked up the slack, with outbound goods to Hong Kong spiking by 32.3% from a year earlier.

Exports to the bloc of 11 Southeast Asian nations, including Indonesia and Thailand, increased 5.1%. The total value of outbound goods to the regional grouping surpassed that of mainland China, making it Japan’s second-largest export destination in February.

Shipments to Western Europe also rose 17.5%, supported by a 10.9% and 18.9% increase in sales to Germany and the U.K., respectively.

Japan’s export growth in February was supported by a 25.1% jump in the value of semiconductor exports, while motor vehicle exports rose 2.5% year on year.

The export data comes just before a Bank of Japan monetary policy meeting on Thursday, as well as Prime Minister Sanae Takaichi’s meeting with U.S. President Donald Trump on the same day stateside.

Imports to Japan climbed 10.2%, compared with the 11.5% increase expected and January’s 2.6% decline.

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