Illustration: Chen Xia/GT

Japan's exports grew 4.2 percent year-on-year in September, according to data published by the Japanese Ministry of Finance on Wednesday. But there were vast variations among overseas markets. While Japan's exports to the US fell 13.3 percent, the sixth consecutive monthly year-on-year decline, exports to China jumped 5.8 percent and those to Southeast Asian countries increased 8 percent.

This continuing decline in Japan's exports to the US comes as no surprise, given the lingering impact of US tariffs on Japan's export-driven economy. According to a bilateral trade agreement, the US will apply a baseline 15 percent tariff on nearly all Japanese imports, alongside separate sector-specific treatment for automobiles and automobile parts, aerospace products, generic pharmaceuticals, and natural resources that are not naturally available or produced in the US.

While it may seem better than the original 25 percent tariff, voices in industrial and economic circles emphasize that the extra tariffs will continue to hinder Japan's economic development. Kristi Govella, senior adviser and Japan chair at the Center for Strategic and International Studies, pointed out in July that 15 percent tariffs will still pose a daunting challenge for the Japanese economy. Steel and aluminum aren't included in the deal and continue to be subject to a separate 50 percent tariff.

Projections by Japanese carmakers illuminate this strain. Toyota said in its earnings report in August that it expected US auto tariffs to reduce its operating income for the 2026 fiscal year by $9.5 billion. Honda said that the tariff hit this year could be as much as 450 billion yen ($2.96 billion), Business Insider reported.

In contrast to lackluster exports to the US, sales to East Asian markets have shown remarkable resilience. Behind the growth of 5.8 percent in Japan's exports to China lies enormous demand potential. 

China's rapid industrial upgrading has created growing demand for high-end precision components and core automotive parts, areas where Japan holds competitive advantages, thus pointing to the economic complementarity within the East Asian region.

Yet, the economic potential of East Asia remains far from fully tapped. Countries across the region possess highly complementary strengths in electronics, vehicles, materials, and machinery. 

By adopting market-oriented approaches that align with their respective development realities and capturing new opportunities from growing regional demand for medium- to high-end consumption, green transformation, and technological upgrading, they can create far greater win-win outcomes. 

For instance, joint research and development (R&D) in critical components for new-energy vehicles by China, Japan, and South Korea could not only share R&D costs but also accelerate innovation through technological complementarity, forming regionally integrated supply chains with global competitiveness. Such cooperation could extend beyond technology development to include production capacity coordination and supply chain optimization.

To unleash the potential of regional collaboration, standards coordination and policy communication will be pivotal. East Asian nations need to strengthen dialogue and alignment on technical standards and digital trade rules, and this process will significantly advance regional economic integration, helping avoid fragmentation due to disparities among standards or external pressures. 

This coordination will not only reduce transaction costs for businesses but also create a unified market environment conducive to regional industrial upgrading, enabling East Asia to gain a stronger position in global economic competition.

Amid changes in the international political and economic landscape, East Asia has the potential to become an engine of global economic growth and innovation, as the region boasts some of the world's most dynamic markets, most complete industrial systems, and most innovative companies. The combination of these elements can release tremendous energy for development. 

The implementation of the Regional Comprehensive Economic Partnership provides an institutional foundation for this process, but deeper cooperation requires greater political wisdom and strategic courage among all countries involved. For Japan, the key challenge still lies in navigating US pressures while pursuing collaborative paths with regional partners.