TOKYO, JAPAN / RankWire.AI / – In July 2026, Japan’s trade activities reached historic highs for both imports and exports, driven by rising energy costs and increased semiconductor demand that boosted trade values. Imports surged by 27.8% compared to the previous year, totaling approximately 12.15 trillion yen. Exports grew 23.2% to about 11.51 trillion yen. According to the Ministry of Finance, imports expanded more rapidly than exports, resulting in a trade deficit of 634.5 billion yen for the month.
This month marked the second consecutive record-setting month for imports by value. The increase in crude oil played a significant role, as Japan faced higher energy costs. Crude oil import volumes rose 5.5% from July 2025, ending a three-month streak of year-on-year declines. Simultaneously, the value of these crude shipments soared by 87.8%. Japan remains heavily reliant on imported energy, making fluctuations in oil prices and exchange rates crucial factors influencing its merchandise trade data.
Exports also hit an all-time monthly peak, extending their streak of year-on-year growth to 11 months. The 23.2% rise followed a 19.3% increase in June. Demand for semiconductor-related products stayed robust, bolstered by investments linked to artificial intelligence and data centre infrastructure. The weaker yen contributed to higher yen-denominated values of overseas sales and helped make Japanese products more affordable for certain foreign buyers. The export growth surpassed the pace observed in the previous month.
Demand for Semiconductors Boosts Japan’s Export Performance
Trade with Japan’s two largest export destinations experienced notable growth during July. Exports to the United States increased by 22.0% from the previous year, reaching approximately 2.09 trillion yen. Similarly, shipments to China climbed 25.8% to around 2.01 trillion yen. These gains came amid a global rise in semiconductor, electronics, and AI-related infrastructure spending, which supported demand for Japanese industrial goods. Japan’s manufacturing sector, heavily invested in electronic components, machinery, and vehicles, continues to contribute significantly to its international merchandise sales.
Data from the Ministry of Finance revealed a shift compared to the first half of 2026, when export growth had already outpaced import growth overall. Customs data indicated that exports from January through June increased by 13.7% year-on-year. During that period, import growth was more modest. Exports of semiconductors and other electronic components were among the key contributors to this positive trend. However, in July, the faster rise in import values reversed that balance, pushing Japan back into a merchandise trade deficit.
Rising Energy Prices Drive Record Import Costs
The July trade figures reflected the impact of escalating crude oil prices on Japan, which relies heavily on imports for its energy needs. The significant increase in the total value of oil imports was driven more by higher prices than by volume growth. This divergence contributed to a record-breaking import bill for the second consecutive month. The weak yen also intensified the cost of goods priced in foreign currencies, with imported energy remaining a dominant component of Japan’s overseas purchases.
The record trade values coincided with sustained overseas demand for Japan’s technology exports. During the April-to-June period, exports helped support the economy, which expanded at an annualized rate of 1.1%. July’s data confirmed that international demand stayed robust at the start of the third quarter. Meanwhile, the 634.5 billion yen trade deficit underscored the scale of Japan’s rising import costs, with record exports unable to fully offset the record import values.