Higher Oil Costs Widen the Trade Gap
Japan recorded a trade deficit of 1.1 trillion yen, or about $7 billion, in August as higher oil prices sharply increased the cost of imports. Preliminary Finance Ministry data showed that this was the country’s fourth consecutive month with a trade shortfall.
Imports rose 28% from a year earlier to 11.15 trillion yen, while exports increased 19.3% to 10 trillion yen. Computer chips and automobiles supported export growth, but the increase was not enough to offset the expanding import bill.
Energy Dependence Shapes Trade Results
Resource-poor Japan imports virtually all of its oil. Much of that supply previously passed through the Strait of Hormuz, where traffic has been restricted by the stalemated war involving Iran.
Brent crude climbed from the upper $60 range per barrel a year ago to more than $100, after reaching $118 in April. The surge placed additional pressure on an economy that must also import food and raw materials.
Trade patterns differed across regions. Japanese exports to the United States rose 24.9%, while imports from the country jumped 55.2%. Exports to the Middle East fell 5.2% and imports declined 4.2%; exports to Europe increased 11% as imports advanced 20.4%
Interest Rates and the Yen Take Focus
Attention has shifted to interest-rate decisions in Japan and the United States. The yen has recently weakened to about 155 per dollar, although some analysts expect it to strengthen to around 150 or below later in the year.
Markets are pricing in a Bank of Japan increase in its benchmark rate from 1% to 1.25%. A stronger yen could reduce the cost of imported oil and other goods, but it would also lower the value of exporters’ overseas earnings when converted into yen.
References
Kageyama, Y. (2026, September 16). Japan records a trade deficit for 4th month as oil imports soar. AP News. https://apnews.com/article/japan-trade-trump-inflation-exports-imports-91185486500f17f8fe7146d9f92d9141