By Makiko Yamazaki
TOKYO (Reuters) - Japan's exports fell for a second straight month in June, data showed on Thursday, underscoring the mounting strain that sweeping U.S. tariffs are placing on the country's fragile economy.
Japan failed to clinch a deal with the U.S. before the July 9 expiration of the temporary pause on the country-specific tariffs after it focused on eliminating the existing sectoral 25% tariffs on automobiles, a mainstay of the export-reliant economy.
Washington now plans to impose
tariffs of 25% on Japanese imports, unless a trade deal is struck by August 1.
Total exports by value dropped 0.5% year-on-year in June, data showed, compared with a median market forecast for a 0.5% increase and a 1.7% decrease in May, the first drop in eight months.
Exports to the United States fell 11.4% in June from a year earlier, while those to China were down 4.7%, the data showed.
Total imports grew 0.2% in June from a year earlier, compared with market forecasts for a 1.6% drop.
As a result, the trade balance stood at a surplus of 153.1 billion yen ($1.03 billion), compared with a forecast for a surplus of 353.9 billion yen.
U.S. tariffs are adding to pressure on the Japanese economy which is struggling due to lacklustre domestic consumption. Japan's economy shrank in the first quarter as rising living costs hurt demand.
So far, Japanese automakers have avoided major price hikes in the U.S. by cutting prices on exported cars and absorbing tariff costs to stay competitive while sacrificing profits.
Japan exported 21 trillion yen worth of goods to the United States last year, with automobiles representing roughly 28% of the total.
Prolonged uncertainties over the impact of the tariffs and the course of trade negotiations will likely force the Bank of Japan to keep focusing on downside risks to the economy and to put rate hikes on hold for the time being, analysts say.
($1 = 148.0000 yen)
($1 = 148.0600 yen)
(Reporting by Makiko Yamazaki; Editing by Kim Coghill and Shri Navaratnam)
