🔗 Share this article The Japanese Economic Output Declines as Exports Suffer by US Tariffs Japan's economy has experienced a decline for the first time in a year and a half, primarily driven by weakening overseas shipments due to recent American tariffs. G7 Economic Leaderboard The Japanese economy has become the initial Group of Seven nation to report an economic contraction in the most recent quarter. As the US still needing to publish its GDP data for the third quarter, the current G7 economic leaderboard show: France: 0.5 percent expansion UK: 0.1 percent Canadian economy: 0.1 percent (preliminary figure) German economy: 0% Italian economy: no growth Japanese economy: -0.4% Tourism Stocks Slump amid Political Dispute with Beijing Alongside the economic contraction, Japan is dealing with an growing diplomatic tension with China regarding Taiwan. Stocks in Japanese tourism and consumer firms have fallen sharply after China advised its citizens to refrain from traveling to Japan. This action by Beijing intensified a diplomatic feud that was triggered by comments from Japan's new PM about the potential of sending forces in the event of a potential Chinese attack on Taiwan. The development caused a wave of selling across Japanese leisure shares. Oriental Land stock fell by 5.7 percent Isetan Mitsukoshi plummeted by 11.3% The national carrier fell by 3.75% "The China-Japan tension over Taiwan and Beijing's advisory advising against travel to Japan brings short-term challenges for consumer-facing sectors. "Chinese visitors account for roughly 25% of Japan's international visitors, making retail outlets, luxury retail, and hospitality especially at risk." GDP Contraction Details Japanese gross domestic product fell by 0.4% in the July-September quarter, as industrial exports were affected by tariffs imposed by the US recently. Overseas shipments were a key factor of the decline, dropping by 1.2% compared with the previous quarter, and were 4.5 percent lower than a the same period last year. Earlier this year, the US administration had proposed Japan with a additional 25% tariff on its goods, which was later lowered to 15 percent when the two countries concluded a trade deal. Private demand also declined, by 0.3 percent quarter-on-quarter. On an annualized basis, Japan's real gross domestic product contracted by 1.8% in the quarter through September. "Japan's economy was stable in the first half of this year and today's GDP data showed that momentum is halted for now. I expect Japan's economy to be returning on a moderate recovery trend going forward." The US administration has recently acknowledged the effect of tariffs on Americans, reducing tariffs on imported food products including meat, tomatoes, beverages and fruits amid increasing concerns about increasing costs. Economic Calendar 8am GMT: Swiss GDP report for Q3 15:00 Greenwich Mean Time: US construction spending data for August