Japan’s Exports Slump, Hopes Turn to Trump-Xi
The stage for next week’s Trump-Xi trade war summit is also the scene of mounting casualties.
(Bloomberg) --
The stage for next week’s Trump-Xi trade war summit is also the scene of mounting casualties.
Japan’s exports fell for a sixth straight month in May, the government said Wednesday, as escalating trade tensions add to concerns about global demand. The unsurprising drop serves as a reminder of a headwind buffeting the Bank of Japan, which meets to set policy on Thursday.
The latest bad news on Japan’s economy came just after things were looking up in the trade world. U.S. President Donald Trump said Tuesday that he and his Chinese counterpart Xi Jinping will hold an “extended meeting” at the Group of 20 summit on June 28-29 in Osaka. Markets cheered. Analysts advised caution for a few reasons:
- At a rally in Florida later on Tuesday to kick off his reelection bid, Trump maintained his poker face. “We’re either going to have a good deal, and a fair deal, or we’re not going to have a deal at all."
- Their hopes of progress dashed in the past, economists are watchful. “We do not believe that the meeting will deliver a trade deal” and is more likely to end with both sides repeating already-known views, Iris Pang, an economist at ING Bank N.V. in Hong Kong, wrote in a report.
- Huawei, the Chinese telecom giant that’s hurting under a U.S. export ban, is a wild card. “China may not be willing to strike any deal or agreement without putting Huawei into the equation,” according to Edison Lee, head of telecom research at Jefferies.
- In search of their own deal later this year, Japanese and U.S. officials plan to hold staff-level discussions soon and the chief trade negotiators of both countries may talk before the Osaka G-20. Two big topics: agriculture and automobiles.
Charting the Trade War
The value of Japan’s shipments abroad fell 7.8% from a year earlier, as exports to China continued to slide. Further drops in shipments of chip-making equipment offered additional signs of softness in overseas tech demand.
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--With assistance from Jiyeun Lee, Henry Hoenig and Jenny Leonard.
To contact the reporter on this story: Malcolm Scott in Hong Kong at mscott23@bloomberg.net
To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Zoe Schneeweiss
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