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Japan's economy unexpectedly contracted by 0.2% in Q1 2025, marking its first quarterly drop since Q1 2024 and exceeding the projected 0.7% year-on-year decline. Falling exports, exacerbated by US President Trump's tariffs on Japanese goods, are primarily responsible. Economists express concern about further slowdown, with some even suggesting a potential recession. The Trump tariffs, coupled with weak domestic consumption and an aging population, pose significant challenges to Japan's economic growth, prompting calls for increased government spending.

Prepared by Christopher Adams and reviewed by editorial team.