đź”— Share this article Japan's Economy Contracts as Exports Suffer by American Tariffs The Japanese economic system has experienced a decline for the first time in a year and a half, mainly caused by weakening overseas shipments because of newly imposed American trade duties. Group of Seven Economic Standings The Japanese economy has become the first G7 country to announce an economic contraction in the latest three-month period. As the United States yet to publish its gross domestic product figures for Q3 2025, the present Group of Seven economic rankings display: The French economy: +0.5% expansion United Kingdom: +0.1% Canada: +0.1% (preliminary figure) German economy: zero growth Italian economy: no growth Japan: negative 0.4 percent Travel Shares Slump amid Diplomatic Rift with Beijing In addition to the GDP decline, Japan is experiencing an growing diplomatic tension with China concerning Taiwan. Stocks in Japan's travel and consumer businesses have declined sharply after China recommended its residents to refrain from traveling to Japan. This decision by Beijing intensified a political dispute that was triggered by comments from Tokyo's recently appointed PM about the possibility of deploying troops in the event of a hypothetical Chinese invasion on Taiwan. The situation caused a surge of selling across Japanese tourism-related shares. Oriental Land shares fell by 5.7 percent Isetan Mitsukoshi plummeted by 11.3% Japan Airlines declined by 3.75 percent "The ongoing dispute over Taiwan and Beijing's travel warning advising against travel to Japan brings near-term challenges for consumer-facing sectors. "Tourists from China account for roughly 25 percent of Japan's international visitors, making department stores, high-end shopping, and hospitality particularly vulnerable." Economic Contraction Details Japan's GDP dropped by 0.4 percent in the third quarter, as industrial overseas shipments were affected by tariffs imposed by the US recently. Exports were a primary factor of the decline, dropping by 1.2% compared with the April-June quarter, and were 4.5 percent lower than a the same period last year. Earlier this year, the American government had threatened Japan with a additional 25% tariff on its products, which was later lowered to 15% when the two nations concluded a trade agreement. Private demand also fell, by 0.3% quarter-on-quarter. On an annualized basis, Japan's GDP contracted by 1.8 percent in the quarter through September. "Japan's economy was strong in the first half of this year and the latest GDP data showed that momentum is halted temporarily. I anticipate Japan's economy to be returning on a moderate growth trend going forward." The White House has lately acknowledged the impact of tariffs on Americans, reducing tariffs on imported food products including beef, produce, beverages and bananas amid increasing concerns about rising costs. Economic Calendar 08:00 Greenwich Mean Time: Switzerland GDP report for Q3 3pm GMT: US construction spending data for August