Japan’s trade deficit decreased sharply to JPY 117.6 billion in July 2025 from JPY 628.3 billion in the same month a year earlier, though it missed market expectations for a JPY 196.2 billion surplus. Exports declined 2.6% year-over-year to JPY 9,359.1 billion, marking the third consecutive monthly drop and the steepest decrease since February 2021, as sweeping U.S. tariffs dampened overseas demand. Imports also contracted, down 7.5% to JPY 9,476.6 billion, marking the fourth decrease so far this year, but declined less than the 10.4% fall expected.