Japan's Trade Deficit Expanded In July, Higher Oil Prices and Changing Supply Base Dominated Imports

Akira Ito
20 Aug, 2026
Tokyo

Japan's benchmark indexes jumped about 1%, snapping a two-day decline amid a pullback in global bond yields from multi-year highs. 

The Nikkei 225 Stock Average increased 1.1%, the TOPIX advanced 0.9%, and the yen strengthened to 158.69 against the U.S. dollar. 

The U.S. Treasury Department said it plans to double its repurchase of 10-, 20-, and 30-year debt over the coming months after the 30-year Treasury yields surged to the highest levels since 2007. 

The U.S. Treasury moved to calm the market after hyperscalers ramped up their issuance of investment-grade bonds, competing with the issuance of long-term Treasury notes.     

Japan's 10-year government bond yields eased to 2.83% after hitting a 30-year high of 2.95% earlier this week.  

 

Japan's Trade Deficit Widened In July; U.S. Oil Imports Soared Ninefold 

Japan's trade deficit widened sharply in July as growth in imports overshadowed robust exports, driven by a strong demand for AI-related computer chips and automobiles.  

Exports rose 23.2% to a record high of 11.5 trillion yen, and imports advanced 27.8% to 12.2 trillion yen, resulting in a wider trade deficit of 634.5 billion ($4 billion) yen compared to 156.3 billion yen a year ago. 

The trade deficit expanded for the third consecutive month, and it was the largest since January as high energy prices lifted overall imports. 

The yen's weakness inflated oil procurement costs and pushed imports to a record high, according to the preliminary data from the Ministry of Finance. 

Goods exports increased for the 11th consecutive month, lifted by a weaker yen and robust demand for AI-related chips and semiconductor equipment from China and shipment of automobiles to the U.S., despite risks from supply chain disruptions linked to the Middle East conflict. 

While Japan's overall imports of crude oil recovered to the level before the U.S. and Iran launched military strikes on Iran in February, the supply mix shifted away from the Middle East.  

Oil imports from the Middle East declined 32.8% to 7.2 million kiloliters, but arrivals from the U.S. jumped ninefold to 4.4 KL in July, according to the government data. 

The overall imports surged 88% to 1.41 trillion yen, as the import cost of crude oil jumped 78% to 116,380 yen per KL. 

Exports to the U.S. advanced 22% to a record 2.1 trillion yen, and imports soared 58% to a record 1.81 trillion yen, shrinking the trade deficit for the eighth consecutive month. 

Shipments to China advanced 25.8% to a record 2 trillion yen, and imports expanded 26.2% to a record 2.8 trillion yen, resulting in a trade deficit for the 64th consecutive month.   

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average increased 1.1% to 66,065.17, and the broader TOPIX advanced 0.9% to 4,048.35. 

Index heavy weights led gainers in Tokyo's trading on Thursday. 

Toyota Motor advanced 4.5% to ¥3,074.0; Tokyo Electron decreased 1.5% to ¥53,810.0; Advantest Corp. edged up 1% to ¥35,360.0; and Kioxia Holdings decreased 6% to ¥52,960.0.  

Nippon Yusen KK increased 0.6% to ¥6,761.0, Mitsui OSK Lines decreased 0.6% to ¥6,940.0, and Kawasaki Kisen Kaisha added 0.5% to ¥3,172.0.