Japan's Trade Balance Swung to Deficit Driven by Higher Energy Costs

Akira Ito
22 Jul, 2026
Tokyo

Japan's indexes erased morning gains following the release of international trade data. 

The Nikkei 225 Stock Average increased 0.1%, the broader TOPIX advanced 0.6%, and the Japanese yen weakened to a new 40-year low of 163.06 against the U.S. dollar. 

In early trading benchmark indexes jumped as much as 0.9%, and they lost momentum after Japan's trade balance swung to a larger-than-expected deficit in June. 

 

Japan's Trade Balance Swung to Deficit in June

Japan's exports rose to a three-month high 10.9 trillion yen in June, an increase of 19.3% from a year ago, according to the Ministry of Finance. 

The weakness in the yen and robust demand for AI-related semiconductors and data center equipment overcame the supply disruptions from the U.S. and Israel's war with Iran. 

Shipments of semiconductor equipment soared 53.8% from a year ago. Exports to Asia gained 22.7%; direct sales to the U.S. advanced 13.0%; and exports to China increased 17.6%. 

Late-2025 government stimulus boosted domestic demand in June, and imports from China increased by 29.4%, Taiwan by 49.1%, South Korea by 32.2%, the U.S. by 52.7%, and the ASEAN region by 25.5%.   

Crude oil imports soared 59.3% as Japan diversified energy procurement away from the Strait of Hormuz amid ongoing regional tensions. 

Japan's trade balance swung to a deficit of 406.9 billion yen in June from a surplus of 122.3 billion yen in the same month a year earlier. 

For the first six months, exports increased 13.7% to 60.7 trillion yen on robust shipments of vehicles to the European Union and semiconductors and other electronic devices, mainly to China. 

Japan's imports advanced 25.4% to 11.4 trillion yen, marking the fifth consecutive month of increase and the strongest expansion since November 2022. 

Crude oil imports in the first six months of 2026 declined 26.4% to 47.31 million kiloliters, according to the preliminary report by the Ministry of Finance. 

Japan's international trade deficit of 1.01 trillion yen, or $6.2 billion, in the first six months to June, with the Middle East crisis and supply disruptions in the Strait of Hormuz affecting imports. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.13% to 66,149.11, and the broader TOPIX advanced 0.6% to 4,038.46. 

Semiconductor- and AI-related stocks led gainers in Tokyo. 

Kioxia Holdings increased 5.3% to ¥64,270.0; Murata Manufacturing Co. Ltd. advanced 3.6% to ¥8,317.0; Tokyo Electron weakened 0.9% to ¥65,960.0, and Advantest Corp. fell 0.2% to ¥29,585.0. 

Nippon Yusen KK increased 1.3% to ¥5,818.0, Kawasaki Kisen Kaisha Ltd. gained 0.5% to ¥2,764.0, and Mitsui O.S.K. Lines jumped 2% to ¥5,783.0.