🔗 Share this article Japan's Economy Declines as Exports Face Impact by American Tariffs The Japanese economic system has shown a contraction for the initial time in six quarters, mainly driven by weakening overseas shipments because of newly imposed American trade duties. G7 Economic Leaderboard The Japanese economy has become the first G7 economy to report an GDP decline in the most recent three-month period. With the US still needing to release its gross domestic product figures for Q3 2025, the present G7 economic standings indicate: The French economy: 0.5 percent quarterly growth United Kingdom: 0.1 percent Canada: +0.1% (provisional estimate) Germany: 0% Italian economy: no growth Japanese economy: -0.4% Travel Shares Slump amid Political Rift with China In addition to the economic contraction, Japan is dealing with an growing political dispute with China concerning Taiwan. Stocks in Japanese tourism and consumer companies have dropped sharply after China advised its residents to refrain from traveling to Japan. This action by Chinese authorities heightened a diplomatic feud that was initiated by remarks from Japan's recently appointed prime minister about the potential of deploying forces in the event of a potential Chinese invasion on Taiwan. The situation caused a surge of sell-offs across Japanese leisure stocks. The Tokyo Disneyland operator stock dropped by 5.7% Isetan Mitsukoshi plummeted by 11.3% The national carrier declined by 3.75 percent "The ongoing dispute over Taiwan and Beijing's advisory advising against travel to Japan introduces short-term difficulties for consumer-facing sectors. "Chinese visitors account for roughly 25 percent of Japan's inbound traffic, making retail outlets, luxury retail, and tourism services especially vulnerable." Economic Decline Details Japanese gross domestic product declined by 0.4% in the July-September quarter, as manufacturers' overseas shipments were hit by tariffs levied by the United States this year. Exports were a major factor of the contraction, falling by 1.2 percent compared with the previous quarter, and were 4.5% lower than a year ago. Earlier this year, the American government had threatened Japan with a new 25 percent tariff on its products, which was later lowered to 15 percent when the two countries concluded a trade agreement. Consumer spending also declined, by 0.3% compared to the previous quarter. On an annual basis, Japan's real gross domestic product contracted by 1.8 percent in the three months through September. "Japan's economy was stable in the first half of this year and today's GDP figures showed that growth is halted temporarily. I anticipate Japan's economy to be back on a moderate growth trend going forward." The White House has recently recognized the effect of tariffs on US consumers, lowering tariffs on food imports including meat, produce, beverages and fruits amid growing concerns about rising costs. Business Agenda 8am GMT: Switzerland GDP report for Q3 15:00 Greenwich Mean Time: US construction spending data for August