TOKYO (Dow Jones)--Japan's merchandise trade surplus rose sharply in March as imports fell more steeply than exports, the Ministry of Finance said Monday. The surplus expanded 39.3% from a year earlier to Y1.265 trillion, the ministry said. That was wider than a surplus of Y942.4 billion estimated on average by economists surveyed by Dow Jones Newswires. The data indicate that while overseas demand is stronger than domestic demand, exports have yet to bottom out. Imports fell 12.7%, while exports slipped 3.1%. Japan's politically sensitive trade surplus with the U.S. increased 6.1% to Y728.5 billion, the ministry said. Steel exports to the U.S. fell 47.1% to 97,000 metric tons in March. The U.S. plans impose 8% to 30% tariffs on a wide variety of steel products starting Wednesday to protect domestic steelmakers from imports as they restructure. Japan plans to launch a complaint with the World Trade Organization after U.S. steel tariffs go into effect. The European Union and China have already filed complaints on the tariffs with the organization. Auto exports to the U.S. rose 35.8% in March to Y415.04 billion. The ministry also said the nation's trade surplus for the fiscal year ended March 31 contracted 25.9% to Y7.113 trillion.