🔗 Share this article Japan's Economy Shrinks as Exports Are Hit by US Trade Duties The Japanese economic system has shown a contraction for the initial time in a year and a half, primarily caused by falling exports because of recent American trade duties. Group of Seven Economic Standings Japan stands as the initial Group of Seven nation to report an economic contraction in the most recent three-month period. As the US yet to publish its gross domestic product figures for the third quarter, the current G7 economic standings indicate: The French economy: 0.5 percent quarterly growth United Kingdom: +0.1% Canadian economy: 0.1 percent (preliminary figure) German economy: 0% Italy: no growth Japan: negative 0.4 percent Travel Shares Decline amid Diplomatic Dispute with Beijing Alongside the GDP decline, Japan is dealing with an escalating political conflict with China concerning Taiwan. Stocks in Japan's tourism and retail businesses have dropped sharply after China advised its residents to avoid visiting to Japan. This action by Beijing escalated a diplomatic feud that was sparked by statements from Japan's new prime minister about the potential of deploying forces in the event of a hypothetical Chinese invasion on Taiwan. The situation caused a wave of sell-offs across Japan's leisure stocks. The Tokyo Disneyland operator shares fell by 5.7 percent The department store chain tumbled by 11.3 percent Japan Airlines declined by 3.75 percent "The ongoing tension over Taiwan and Beijing's advisory advising against travel to Japan introduces short-term headwinds for retail and hospitality sectors. "Chinese visitors represent roughly 25% of Japan's inbound traffic, making department stores, luxury retail, and tourism services particularly vulnerable." GDP Contraction Breakdown Japanese GDP dropped by 0.4% in the third quarter, as manufacturers' overseas shipments were hit by tariffs imposed by the United States this year. Exports were a major factor of the contraction, dropping by 1.2% compared with the April-June quarter, and were 4.5 percent lower than a year ago. Previously, the American government had proposed Japan with a additional 25% tariff on its goods, which was later reduced to 15% when the two countries reached a trade deal. Private demand also declined, by 0.3% quarter-on-quarter. On an annual basis, Japan's GDP contracted by 1.8 percent in the three months through September. "Japan's economy was strong in the first half of this year and today's GDP data showed that growth is halted for now. I expect Japan's economy to be returning on a gradual growth trend going forward." The US administration has lately acknowledged the effect of tariffs on Americans, lowering tariffs on imported food products including beef, tomatoes, coffee and fruits amid growing concerns about increasing costs. Economic Agenda 8am GMT: Switzerland GDP report for Q3 15:00 Greenwich Mean Time: US construction spending data for August