Supply Lines: Japan’s trade concerns

Japan's trade balance switched back into surplus last month amid several mixed signals — the value of shipments abroad grew while imports un

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Japan's trade balance switched back into surplus last month amid several mixed signals — the value of shipments abroad grew while imports unexpectedly fell — during a period of high uncertainty for major exporters worried about imbalances with the US. Yet economists are warning warn that the growth in exports may not be sustainable, citing weak overseas demand and potential disruptions from the escalating trade war between the US and other nations. (Read the full story from Wednesday's trade numbers here.) Fresh tariffs on steel and aluminum started hitting the Asian nation last week, and its manufacturers face the prospect of reciprocal tariffs on a variety of sectors plus a 25% auto levy set to start in early April. Also on Wednesday, the Bank of Japan signaled growing unease over the potential impact on the global economy from escalating trade tensions, while keeping its key policy rate unchanged. The central bank added a reference to trade policies to its list of risks to the outlook. The BOJ's messaging is the latest from a central bank that's signaling concern about disruptions, growth headwinds and a return of inflationary pressures from a trade war between the world's largest economies. To lower the impact from any tariffs imposed by President Donald Trump, Japanese companies are already stockpiling goods in the US, according to a survey by Bloomberg News. Japan has so far failed to get an exemption from direct levies from the Trump administration, despite a seemingly positive meeting between the two nations' leaders in February. Read More: Japan's GDP Growth Imperils 2% Defense Spending Target Japan's trade surplus with America widened 29% last month from a year earlier, with auto shipments increasing almost 14%. Trump has long criticized the US trade deficit with Japan, and the president recently accused Japan and China of gaining an unfair advantage through foreign exchange policy, which Japan has denied. Related Reading: Japan Fails to Get Immediate Tariff Reprieve Despite Plea  US Lambasts Japan's '700% Rice Tariff,' Hinting at Levy Target Japan's Economic Growth Revised Lower Ahead of BOJ Meet  —Brendan Murray in London Click here for more of Bloomberg.com's most-read stories about trade, supply chains and shipping.

Charted Territory

Fired up factories | US factory output rose by the most in a year as a surge in motor vehicle production led a broader increase. Manufacturing output, which accounts for three-fourths of total industrial production, jumped 0.9% in February after a 0.1% gain the prior month, new Federal Reserve data showed. Separately, France's economy is mired in sluggish growth, weighed down by concerns of a global trade war and the impact of a political crisis on public spending.

Today's Must Reads

This week's episode of the Trumponomics podcast takes the long view on market upheaval caused by Trump's economic policies. For more on what could happen over the next few years, host Stephanie Flanders speaks with Tom Orlik, chief economist for Bloomberg Economics. Trump is all in on artificial intelligence and the data centers that power it, but his tariffs threaten to pile new costs on the US businesses spending hundreds of billions to build them. The European Union is ready to talk to Trump before making any more decisions on retaliatory tariffs, Ireland's deputy prime minister said. Meanwhile, Italian Prime Minister Giorgia Meloni warned that tariffs could fan inflation and urged the EU to make a deal with the US. A Trump administration plan to introduce fees on the use of Chinese commercial ships is likely to damage the US economy and may fail to reverse China's shipbuilding dominance, Bimco said.  India is about to join the worldwide wave of steel protectionism, outlining plans for sweeping tariffs. Taiwan companies are shifting manufacturing to the US, with companies like TSMC, Foxconn, and others investing in US production facilities. In this episode of the Talking Transports podcast, Saia's President and CEO Fritz Holzgrefe discusses the outlook for the LTL market and the company's network build-out.

On the Bloomberg Terminal

Prices of imports from most major countries rose in February. Among countries targeted by Trump's tariffs, import prices from Canada saw the largest jump, followed by China and Mexico, according to Bloomberg Economics. The 25% aluminum tariff won't reduce the US's reliance on imports  — 50% of consumption in 2024 — and will raise costs for the automotive, construction and packaging industries, according to Bloomberg Intelligence. For Bloomberg Economics trade coverage: BECO MODELS TRADE Run SPLC after an equity ticker on Bloomberg to show critical data about a company's suppliers, customers and peers. Use the AHOY function to track global commodities trade flows. See DSET CHOKE for a dataset to monitor shipping chokepoints.  For freight dashboards, see BI RAIL, BI TRCK and BI SHIP and BI 3PLS Click HERE for automated stories about supply chains. On the Bloomberg Terminal, type NH FWV for FreightWaves content. See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.

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