In October 2024, Japan's imports rose by 0.4% year-on-year, defying forecasts of a 0.3% decrease, resulting in a trade deficit of 461.2 billion yen ($2.98 billion).

This trade deficit exceeded expectations, which had anticipated a deficit of 360.4 billion yen, underscoring ongoing trade imbalances.

Conversely, Japan's exports increased by 3.1% year-on-year in October, surpassing market predictions of a 2.2% rise and reversing a 1.7% decline from September.

The growth in exports was particularly fueled by a rise in demand for chip equipment from China, which saw a 1.5% increase in exports from Japan.

However, exports to the United States, Japan's largest export market, declined by 6.2% during the same month.

Despite these fluctuations in trade, Japan's domestic demand is showing signs of recovery, with recent GDP data indicating a stronger-than-expected rebound in private consumption, bolstered by rising wages.

Bank of Japan Governor Kazuo Ueda remarked on the progress towards sustained wages-driven inflation, suggesting that an interest rate hike could be on the horizon as early as December 2024.

Amid these developments, concerns are growing over potential new tariffs proposed by U.S. President-elect Donald Trump, which could significantly alter international trade dynamics.

Estimates indicate that a 10% tariff on all U.S. imports could reduce Japan's GDP by 0.13%, while a potential 60% tariff on Chinese goods could lead to retaliatory tariffs and a further 0.12% GDP decrease.