Japan's industrial production increased in May but fell short of analysts' expectations, impacted by the looming threat of higher US tariffs on exports. Despite a slight rise in exports during the first 20 days of June ahead of the Trump administration's scheduled tariff hike, concerns remain over the sector's outlook. The Ministry of Economy, Trade and Industry (METI) forecasts a decline in steel production from July to September, with crude steel output expected to fall by 2.3% year-over-year and total steel production down 0.4% quarter-over-quarter to 20.11 million tonnes. Steel demand, including exports, is projected to decrease by 4.2% year-over-year to 18.38 million tonnes, and steel exports are anticipated to drop 11.5% year-over-year to 6.09 million tonnes in 2025. Meanwhile, factory activity across many Asian economies contracted in June due to US tariff uncertainties, which suppressed demand and clouded the region's economic recovery prospects. This contrasts with European factories, where industrial production showed signs of recovery despite ongoing trade tensions with the US. In the US, manufacturing continues to struggle with weak demand, higher input costs, and declining employment as tariffs exert pressure on the sector. However, Japan's service sector sentiment improved in early July, partially offsetting concerns related to tariffs.