🔗 Share this article The Japanese Economic Output Declines while Exports Suffer by US Tariffs Japan's economy has recorded a decline for the initial time in a year and a half, primarily caused by weakening exports due to newly imposed American trade duties. G7 Growth Standings Japan stands as the first G7 nation to announce an economic contraction in the latest three-month period. With the US still needing to release its GDP figures for Q3 2025, the current G7 economic leaderboard show: France: 0.5 percent quarterly growth United Kingdom: +0.1% Canada: +0.1% (provisional estimate) German economy: zero growth Italy: no growth Japan: -0.4% Travel Stocks Decline amid Diplomatic Rift with Beijing Alongside the economic contraction, Japan is facing an escalating diplomatic conflict with China regarding Taiwan. Stocks in Japanese tourism and retail companies have declined significantly after China urged its citizens to avoid visiting to Japan. This decision by Chinese authorities heightened a political dispute that was sparked by remarks from Japan's new prime minister about the possibility of deploying forces in the event of a hypothetical Chinese invasion on Taiwan. The situation triggered a wave of sell-offs across Japan's tourism-related shares. The Tokyo Disneyland operator shares dropped by 5.7 percent The department store chain tumbled by 11.3 percent The national carrier fell by 3.75% "The China-Japan tension over Taiwan and Beijing's advisory advising against visits to Japan introduces short-term headwinds for retail and hospitality sectors. "Chinese visitors represent roughly 25 percent of Japan's inbound traffic, making department stores, high-end shopping, and tourism services particularly at risk." GDP Contraction Details Japanese GDP declined by 0.4% in the July-September quarter, as manufacturers' exports were hit by tariffs imposed by the United States this year. Exports were a key factor of the decline, falling by 1.2 percent compared with the April-June quarter, and were 4.5% lower than a year ago. Previously, the US administration had threatened Japan with a additional 25 percent tariff on its goods, which was later lowered to 15 percent when the two countries reached a trade deal. Consumer spending also declined, by 0.3% quarter-on-quarter. On an annualized basis, Japan's real gross domestic product shrank by 1.8 percent in the three months through September. "Japan's economy was stable in the initial six months of this year and the latest GDP figures showed that growth is halted temporarily. I expect Japan's economy to be back on a gradual growth trend going forward." The White House has recently acknowledged the effect of tariffs on Americans, reducing duties on food imports including beef, produce, beverages and fruits amid increasing concerns about rising costs. Business Calendar 8am GMT: Swiss GDP report for Q3 15:00 Greenwich Mean Time: US construction spending data for August