Foreign trade of Japan - statistics & facts
International trade is an opportunity for the Japanese economy to grow as domestic markets are maturing amid a shrinking and aging society. The country is not considered a trade-dependent nation, but the trade openness ratio has reached record highs as market liberalization measures take effect. As domestic markets are reaching saturation, companies are raising outward investments into foreign markets in strategic expansions or merger and acquisition plans.
Meanwhile, non-durable goods comprise a significant share of the import market owing to the lack of natural resources within the Japanese territory. Following the weakening of the yen and globally surging resource prices, industries relying on overseas procurement like the energy sector were hit by rapid price inflation. As such, mineral fuels accounted for a quarter of the import market on a value basis in 2023, resulting in price hikes in domestic markets.
However, recent disagreements with China have impacted Japan’s expansion plans for its fishery industry. Following the discharge of treated nuclear wastewater in the process of decommissioning the damaged Fukushima Daiichi nuclear power plant in August 2023, China enforced a blanket ban on Japanese seafood imports, and Hong Kong restricted the trade of fishery products from 10 prefectures. An increase in exports of high-value fishery products like pearls, corals, and tuna was able to offset the drop on a value-basis, but the embargo shapes Japan’s diplomatic talks with one of its largest trade partners in 2024. Simultaneously, businesses are exploring new export destinations in Europe and the United States for their flagship products like scallops and fresh tuna to limit losses resulting from the ban.
Trade balance
In the last decade, Japan managed to downsize the deficit in goods and service trade on its balance of international payments (BoP), facilitated by the country’s growing export position for physical goods. Major commodities exported from Japan include electrical and general machinery, as well as transport equipment. Taking advantage of the Japanese automotive and machinery industries' favorable reputation in the global market and the location of leading trading businesses’ headquarters close to strategically convenient logistic hubs within the country, metal and electronic corporations are contributing significantly to Japan's exports.Meanwhile, non-durable goods comprise a significant share of the import market owing to the lack of natural resources within the Japanese territory. Following the weakening of the yen and globally surging resource prices, industries relying on overseas procurement like the energy sector were hit by rapid price inflation. As such, mineral fuels accounted for a quarter of the import market on a value basis in 2023, resulting in price hikes in domestic markets.
Between trade agreements and bans
Japan has been working on expanding bilateral trade with important partners. While free trade agreements with the European Union, the United Kingdom, and the United States grant access to major Western markets, the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) signifies deepening relationships with the ASEAN and South American regions.However, recent disagreements with China have impacted Japan’s expansion plans for its fishery industry. Following the discharge of treated nuclear wastewater in the process of decommissioning the damaged Fukushima Daiichi nuclear power plant in August 2023, China enforced a blanket ban on Japanese seafood imports, and Hong Kong restricted the trade of fishery products from 10 prefectures. An increase in exports of high-value fishery products like pearls, corals, and tuna was able to offset the drop on a value-basis, but the embargo shapes Japan’s diplomatic talks with one of its largest trade partners in 2024. Simultaneously, businesses are exploring new export destinations in Europe and the United States for their flagship products like scallops and fresh tuna to limit losses resulting from the ban.
