Japan’s Surplus With U.S. Shrinks in ’95

Japan’s trade surplus with the United States shrank in 1995 for the first time in five years, a development that has already boosted the dollar and could eventually help ease long-standing trade tensions.

The U.S.-Japan trade gap, calculated as exports minus imports, narrowed by 17% to $45.56 billion, the Ministry of Finance said, its lowest level since 1992. In 1994, it expanded to a record $54.9 billion.

Japan’s annual trade surplus with the world also declined for the first time in five years, shrinking 11.4% to $107.10 billion. In 1994, it reached a record $120.9 billion.

“The only question now is how much it will decline,” said Jesper Koll, chief economist at JP Morgan in Tokyo. Koll sees Japan’s trade surplus falling to less than $80 billion this year. “I think you ain’t seen nothin’ yet.”

The ministry also said Japan’s trade gap with the United States in December fell for the seventh straight month, declining 35.1% to $3.6 billion, and Japan’s global trade surplus fell 16% to $10.9 billion.

Those numbers sent the dollar higher against the yen. It was trading at 105.84 yen in late New York late Tuesday, up from 105.77 late Monday.

A shrinking trade surplus means Japanese exporters have fewer dollars to sell for yen.

The dollar has risen 26% against the yen since early July.

Changes in the flow of automotive trade played a key role in shrinking the surplus, the figures show. Japan’s automotive trade gap with the U.S., something that nearly set off a trade war between the two countries last year, shrank 14.4% to $26.89 billion, down from $31.43 billion in 1994.

Japanese auto makers are cutting back on exports in an effort to avoid exchange-rate losses and to move production closer to foreign markets. U.S.-bound auto exports fell 13.9% from 1994.

Imports of U.S.-made autos, meanwhile, are rising, driven largely by so-called “reverse imports” from Japanese plants in the U.S., particularly those of Honda Motor Co. and Toyota Motor Corp. Auto imports from the U.S. rose 57.1%. Trade of vehicles and auto parts accounted for 59% of the U.S.-Japan surplus, up from 57.2% in 1994.

U.S.-bound exports of personal computers and telecommunications equipment declined in 1995, the ministry said.

Leading imports from the United States were mostly computer-related: semiconductors, which rose 57.4%, and office equipment--mainly personal computers--which rose 26.2%.

Japan’s trade gap with the rest of Asia widened for the sixth straight year in 1995 by 14.9% to $70.75 billion. Japan’s Asia surplus has surpassed its surplus with the United States for three years now.

With the European Union, Japan’s trade gap shrank for the third year, falling 4.5% to $21.45 billion.

Worldwide imports to Japan rose 15.4% in December to $28.517 billion, whereas exports increased 4.6% to $39.464 billion, the ministry said.