Japan's Economy Contracts As Exports Get Hit By US Tariffs

Summary:

Japan's economy sank at an annualized rate of 1.8% in the July-September period, government data showed Monday, as President Donald Trump's tariffs sent the nation's exports spiraling.

On a quarter-by-quarter basis, Japan's gross domestic product, or GDP, or the sum value of a nation's goods and services, slipped 0.4%, in the first contraction in six quarters, the Cabinet Office said.

The annualized rate shows what the economy would have done if the same rate were to continue for a year. The fall was still smaller than the 0.6% drop the market had expected.

A big decline during the quarter came in exports, which were 1.2% down from the previous quarter.

Some businesses had sped up exports, when they could, to beat the tariffs kicking in, inflating some of the earlier data for exports.

On an annualized basis, exports dropped 4.5% in the three months through September.

Imports for the third quarter slipped 0.1%. Private consumption edged up 0.1% during the quarter.

Tariffs are a major blow to Japan's export-reliant economy, led by powerful automakers like Toyota Motor Corp., although such manufacturers have over the years moved production abroad to avert the blunt of tariffs.

The U.S. now slaps a 15% tariff on nearly all Japanese imports.

Japan also faced political uncertainty recently, until Sanae Takaichi became prime minister in October.

Source: Yahoo Finance

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Daniel Carter

Economic

Japan's economy contracted an annualised 1.8% in the July-September quarter, the first fall in six quarters, due to a hit to exports ‌from U.S. tariffs, government data showed on Monday.

The decline, while not as steep as expected, could complicate ‌the Bank of Japan's plans to raise interest rates further. Analysts are now focusing on how soon the world's fourth-largest economy will overcome the tariff impact and rebound.

The decrease in gross domestic product was narrower than a median market estimate of a 2.5% fall in a Reuters poll.

It ⁠followed revised growth of 2.3%‌ in the previous quarter, when the economy got an extra boost from solid exports that reflected front-loading shipments to the U.S. as ‍Japan's tariffs negotiations lingered.

Washington formalised a trade agreement with Tokyo in September, implementing a baseline 15% tariff on nearly all Japanese imports, down from the initial 27.5% on autos and a 25% duty threatened for most other goods.

The third-quarter reading translated into a quarterly fall of 0.4%‌, better than the median estimate of a 0.6% contraction.

Private consumption, which accounts for more than half of economic output, rose 0.1%, matching a market estimate.

But that cooled from the 0.4% rise in the second quarter, indicating that high food costs kept households reluctant to spend.

Net external demand, or exports minus imports, knocked 0.2 of ⁠a percentage point off growth, versus a 0.2 point positive contribution in the April-June period.

Capital spending, a key driver of private demand-led growth, rose 1.0% in the third quarter, versus a rise of 0.3% in the Reuters poll.

The ‍weak GDP data comes ⁠as new Prime Minister Sanae Takaichi's government is compiling a stimulus package to cushion the blow to households from the rising living costs.

Close economic advisers to Takaichi have cited a likely ⁠sharp GDP contraction as a reason for aggressive stimulus measures.

The latest data could embolden those advisers to call for the BOJ ‌to go slow in raising interest rates, analysts say.

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Daniel Carter

Political

The US State Department said Sunday it plans to designate a Venezuelan drug cartel as a foreign terrorist organization and cited the country's president, Nicolas Maduro, as its leader.

The designation would take effect on Nov. 24 and ban entry to the US and allow the US to seize the organization's funds.

"Based in Venezuela, the Cartel de los Soles is headed by Nicolás Maduro and other high-ranking individuals of the illegitimate Maduro regime who have corrupted Venezuela's military, intelligence, legislature, and judiciary," Secretary of State Marco Rubio said in a statement. "Neither Maduro nor his cronies represent Venezuela's legitimate government."

The Treasury Department in July deemed the cartel as a specially designated global terrorist group, which imposed some penalties.

The US since September has been carrying out a campaign of airstrikes against alleged drug trafficking boats in the Caribbean and eastern Pacific Ocean, killing dozens, in a bid to halt South American drug cartels from exporting illegal narcotics.

Earlier Sunday, the USS Gerald R. Ford aircraft carrier entered the Caribbean Sea in a mission the Pentagon said was aimed at supporting President Donald Trump's goals of countering narco-terrorism.

Trump said Friday he had "sort of made up my mind" when asked if he had come to a decision on next steps with Venezuela. "I can't tell you what it is, but we made a lot of progress with Venezuela in terms of stopping drugs from pouring in," he told reporters aboard Air Force One.

Trump has repeatedly threatened to expand those attacks to land, fueling speculation about US strikes on Venezuela.

Source: Bloomberg Europe

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

India emerges as Japan’s new production powerhouse

In one of the most pivotal industrial shifts of the decade, leading Japanese carmakers Toyota, Honda, and Suzuki are dramatically pivoting away from China and pouring investments into India. According to Autoblog, these companies have committed more than $11 billion to building and expanding their manufacturing capabilities across India. The goal: to transform India into a global manufacturing and export hub for affordable vehicles, especially as geopolitical and market dynamics make China a less favorable option.

Toyota alone is investing over $3 billion to expand its southern India factory and build a new facility, boosting annual capacity to over one million vehicles. Suzuki, meanwhile, is deploying $8 billion to raise its production from 2.5 million to 4 million cars annually. Honda has also announced plans to begin electric vehicle (EV) production in India by 2027.

FDI flows shift dramatically from China to India

This strategic relocation is backed by a striking realignment in foreign direct investment (FDI). Japanese FDI into India surged from under $300 million in 2021 to nearly $1.92 billion in 2024 a more than sevenfold increase. In stark contrast, Japanese investment in China has plunged 83% over the same period, now standing at roughly $300 million.

The reasons are clear: India offers cost-effective manufacturing, abundant labor, and a policy environment that restricts Chinese EV competitors, shielding Japanese firms in one of the world’s fastest-growing automotive markets.

India’s export growth and tariff advantage

India’s rise as a vehicle exporter is accelerating. In FY2024, it produced five million passenger vehicles, exporting around 800,000 of them a 19% year-on-year increase. With exports to Latin America and Africa expanding rapidly, India is positioning itself as a key global supplier of low-cost vehicles and parts.

Critically, passenger cars and components exported from India currently enjoy tariff-free access to the U.S., giving Japanese firms an edge amid rising protectionism and global supply chain recalibration. This contrasts sharply with Chinese-made cars, which continue to face mounting trade barriers in Western markets.

Rising domestic potential: Demographics, not saturation

India surpassed Japan in 2023 to become the world’s third-largest auto market, selling 4.27 million vehicles versus Japan’s 4.25 million. Yet, India’s vehicle ownership remains low only 44 cars per 1,000 people compared to 251 in China and 502 in Japan. This underscores immense room for domestic expansion, particularly in the affordable segment where Japanese firms are strongest.

The Indian auto industry has grown 60% since 2015 and is supported by favorable demographics, rising incomes, and government incentives for local manufacturing. For Japanese automakers aiming to dominate the global low-cost vehicle space, India represents both a vast domestic opportunity and a scalable base for exports.

The shift by Japan’s automotive giants to India is not just a geographic realignment it’s a strategic repositioning in a post-China world. While China remains a manufacturing giant, India’s demographic profile, cost competitiveness, and growing global connectivity make it an increasingly attractive long-term bet. If current trends continue, India could soon rival traditional industrial centers not just in scale, but in strategic value across global automotive supply chains.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Political

Budapest challenges EU’s legal basis for energy sanctions

On November 14, Hungarian Prime Minister Viktor Orbán declared that his government will take legal action against the European Union at the European Court of Justice. The move follows the EU’s recently adopted plan to phase out all Russian gas imports by January 1, 2028, a step Hungary deems both unlawful and economically harmful.

Orbán claims that the decision, endorsed on October 20 by EU energy ministers, violated the EU’s own legal protocols. Instead of requiring unanimous consent from all 27 member states, the policy was passed via “qualified majority”, a method that mandates only 55% of member states representing at least 65% of the EU population. Orbán argues this procedural choice is valid only for trade policy decisions, not for sanctions, which traditionally require full consensus.

Policy distinction at the heart of the legal dispute

According to Orbán, the EU’s classification of the gas ban as a trade measure is a legal maneuver designed to circumvent the requirement for unanimity. He insists that the gas phase-out carries the hallmarks of a sanctions regime, particularly given its roots in geopolitical tensions following the Russia–Ukraine conflict. As such, he asserts that it should have required approval from all member states, including Hungary and Slovakia both of which openly opposed the plan.

Speaking on national radio, Orbán called the decision a violation of European values and insisted that energy security cannot be sacrificed for political signaling. He also hinted that Budapest is exploring additional countermeasures to block or delay implementation of the gas ban.

The EU’s broader energy diversification agenda

The gas ban is part of the EU’s broader strategy to eliminate dependence on Russian fossil fuels, first outlined in the 2022 Versailles Declaration following the invasion of Ukraine. While Russian oil imports to the EU have dropped to below 3% of total supply, Russian natural gas still accounted for roughly 13% of the bloc’s gas imports in 2025 valued at more than €15 billion annually, according to Council data.

Under the current EU plan, new contracts for Russian gas will be banned starting January 1, 2026. Short-term contracts must end by mid-2026, and long-term contracts will be terminated by January 1, 2028. These measures aim to reduce the EU’s geopolitical vulnerability and further isolate Moscow economically.

Energy security vs political cohesion

Hungary and Slovakia have both warned that the gas ban could significantly raise energy prices and undermine supply stability in Central Europe. Orbán argues that energy policy should remain outside of partisan or ideological conflicts and emphasized that economic stability is a prerequisite for political unity and security.

Hungary continues to import Russian gas, alongside countries like Slovakia and Belgium, making it one of the last holdouts as most EU members diversify their energy sources. Orbán’s stance underscores the tension between collective EU goals and national energy interests, especially for member states still deeply tied to Russian infrastructure.

Hungary’s decision to legally challenge the EU’s Russian gas embargo could test the limits of EU procedural law and unity on foreign policy. As Brussels accelerates its decoupling from Russian energy, resistance from Orbán’s government reflects deeper fractures within the bloc over how to balance legal legitimacy, energy security, and geopolitical strategy. The outcome of this dispute at the European Court of Justice may set a precedent for future EU decision-making in crisis contexts.

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

A booming market shaped by health-conscious consumers and demographic momentum

At the 2025 International Conference on Functional Foods held in Taipei, updated projections highlighted the significant growth trajectory of Vietnam's functional food and dietary supplement (FFDS) market. Valued at nearly $900 million in 2024, the sector is forecasted to exceed $1.95 billion by 2033, reflecting a compound annual growth rate driven by demographic trends, evolving consumer behavior, and robust digital policy support.

CEO Trần Viết Thanh of Life Gift Vietnam emphasized three socio-demographic pillars propelling this growth. First, with over 101 million citizens, Vietnam ranks as Southeast Asia’s third most populous country, offering a vast, youthful, and increasingly health-conscious consumer base. Second, a rapidly expanding middle class is fueling greater investment in wellness. Third, a steadily aging population is creating surging demand for supplements focused on cardiovascular health, bone and joint support, cognitive function, immunity, and general nutrition.

These intersecting forces are creating what Thanh described as a “golden window” of opportunity for domestic and regional businesses, investors, and health product manufacturers. Vietnam, he asserted, is not only a high-potential consumer market but also a transparent and promising destination for FFDS-related investment.

Functional foods moving from healthcare support to health economy pillars

According to data from Mordor Intelligence, the global functional food market reached $186 billion in 2023 and is expected to surpass $370 billion by 2025, growing at nearly 8% annually. Functional foods are evolving from supplementary healthcare aids to core drivers of the modern health economy. As consumers increasingly prioritize personalized nutrition, technologies like AI, big data, and biotechnology are redefining the sector, aligning it with the vision of a "smart health ecosystem."

In this context, Vietnam is well-positioned to integrate itself more deeply into the regional supply chain. With over 60% of adults having used at least one functional food product, Vietnam already boasts one of the highest consumption rates in Asia.

Digitalization, standardization, and cross-border cooperation as strategic pillars

Thanh argued that sustainable development in the FFDS sector depends on three interlinked strategies. First is innovation and technological mastery, including control over production processes, digital transformation, and rigorous product testing. Second is strict compliance with both domestic and international standards, ensuring global product readiness. Third is international collaboration through research partnerships, technology transfer, and development of globally compliant health solutions.

The Vietnamese government’s macroeconomic direction and digitalization policies are enhancing the stability of the investment environment and encouraging foreign companies to enter the market. Local reforms such as GMP production standardization, transparent supply chain traceability, and tighter enforcement against violations are aligning Vietnam more closely with global benchmarks.

Local advantages driving international investment interest

Vietnam’s appeal lies not only in its demand-side dynamics but also in its production-side competitiveness. The country benefits from abundant indigenous medicinal resources, low-cost production capacity, and a high level of global integration. These advantages are drawing attention from Taiwanese companies and other international firms exploring expansion and partnership opportunities in Vietnam.

The 2025 International Conference served as a platform for regional dialogue on “Precision Marketing Strategies for Functional Foods and Their Export Expansion.” It emphasized how digital marketing, data-driven strategies, and regional cooperation can unlock trade potential and accelerate sectoral innovation across Asia.

Vietnam’s functional food sector stands at a pivotal juncture. While opportunity abounds, the market also faces increasing demands for transparency, product quality, and regulatory compliance. If stakeholders align on innovation, standardization, and international collaboration, Vietnam is poised to become not just a high-growth market but also a key regional hub in the health economy where science, technology, and consumer wellness converge for sustainable value creation.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

A unified digital push against VAT evasion

On November 14, the European Commission (EC) unveiled a sweeping proposal aimed at reinforcing tax enforcement across the EU by enhancing coordination between national tax authorities, the European Public Prosecutor’s Office (EPPO), and the European Anti-Fraud Office (OLAF). The core goal is to bolster the Union’s capacity to prevent and prosecute VAT-related fraud especially carousel fraud, a major form of cross-border tax evasion.

This proposed legal amendment would authorize direct and secure data exchanges between agencies, paving the way for faster detection of irregularities, more accurate investigations, and a stronger safeguard of EU financial interests. If adopted, this would mark a milestone in the Union’s efforts to modernize its tax architecture and respond effectively to increasingly sophisticated financial crimes.

Massive financial losses prompt urgent reform

Carousel fraud, officially classified as Missing Trader Intra-Community (MTIC) fraud, is estimated to cost EU member states between €12.5 billion and €32.8 billion annually. It involves organized criminal networks exploiting the EU’s VAT system through a series of rapid cross-border transactions that result in substantial unpaid tax.

In 2022 alone, total VAT revenue loss across the EU reached an estimated €89.3 billion. This illustrates the urgent need for structural reforms and a more unified digital infrastructure to support financial oversight and prevent future revenue leakage.

Real-time reporting and direct agency collaboration

A central component of the proposal is the establishment of a legal framework for real-time digital VAT reporting on cross-border transactions. This digital transformation is part of the EU’s broader “VAT in the Digital Age” package, which aims to make tax monitoring faster, more accurate, and resistant to fraud.

For the first time, EPPO and OLAF would be granted real-time access to VAT data when necessary, enabling them to act quickly on suspicious transactions. In parallel, the reform creates permanent and secure communication channels between these two EU bodies and Eurofisc the specialized network of VAT anti-fraud experts in member states.

Such digital connectivity will allow investigative authorities to identify fraud patterns earlier, coordinate multi-country investigations more efficiently, and facilitate faster prosecutions, thereby closing the enforcement gap exploited by cross-border tax criminals.

Towards a transparent and trusted tax environment

By proposing to institutionalize proactive data sharing, automated tax risk assessments, and more efficient investigative workflows, the EU is not only addressing financial fraud but also reinforcing the credibility of its tax system. The reform seeks to foster a business climate that is fairer and more transparent, benefiting compliant taxpayers and legitimate enterprises.

It also reflects the EU’s broader vision of using digital tools to strengthen internal market governance, a goal that is increasingly important in times of budgetary constraints and fiscal strain caused by economic volatility and geopolitical instability.

Next steps for legislative approval

The proposal will now move to the Council of the European Union for approval and will be reviewed by the European Parliament and the Economic and Social Committee. Once approved and published in the EU’s Official Journal, the new regulations will enter into force and proceed to full implementation.

The European Commission’s latest VAT initiative represents a strategic step forward in combating systemic tax fraud. Through real-time digital coordination and cross-border transparency, the EU is fortifying its fiscal defenses, recovering lost revenue, and sending a clear signal that fraud will no longer find refuge in regulatory fragmentation.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites