Japan’s economy shrank more sharply than initially estimated in the July–September quarter, contracting at an annualized rate of 2.3% as exports weakened under U.S. President Donald Trump’s tariff measures and public investment slowed.

Revised government data released Monday show the economy fell 0.6% from the previous quarter — a steeper downturn than the preliminary estimate last month, which pointed to a 1.8% annualized contraction or a 0.4% quarterly decline, according to the Cabinet Office.

The annualized figure reflects how the economy would perform if the quarter’s pace continued for a full year.

Exports dropped 1.2% from the previous quarter, unchanged from the earlier estimate, while private residential investment slid 8.2%, a milder fall than the initially reported 9.4%.

The tariffs imposed by Trump earlier this year have weighed heavily on Japan, particularly duties targeting automobiles — a key sector. Although the U.S. scaled back planned tariff surcharges on Japanese goods to 15% in September, the trade pressure has already disrupted business confidence. During negotiations, Japan pledged to invest $550 billion in the U.S. as a conciliatory gesture.

Analysts attribute the significant drop in residential investment partly to updated building regulations that curbed housing starts earlier this year.

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Revised data also show imports dipping 0.4% during the quarter, while private consumption edged up 0.2%.

The ongoing tariff disputes have strained Japan’s relations with its most critical ally, the United States.

Meanwhile, Japan’s first female prime minister, Sanae Takaichi, continues to enjoy strong public support, known for her assertive nationalist rhetoric and promises of economic revitalization — though analysts say the outlook remains uncertain.

Source: AP