Japan’s Exports Drop Sharply in May as U.S. Shipments Slide 11.1%

Tokyo – Japan’s exports declined by 1.7% year-on-year in May, marking the sharpest fall since September 2024, as shipments to the United States dropped 11.1%, largely due to rising trade tensions and tariff risks.

The figure was better than the 3.8% drop forecasted by economists but reversed a 2% gain in April, according to Japan’s Ministry of Finance.

Exports to China also fell by 8.8%, while global automobile exports were down 6.9%. Exports of motor vehicles to the U.S. declined steeply by 24.7%, reflecting the growing impact of U.S. tariffs on Japanese goods.

The downturn comes ahead of a planned 24% reciprocal tariff on all other Japanese exports to the U.S., set to begin July 9. Japan already faces a 25% tariff on auto and steel exports.

Japan’s trade deficit stood at 637.6 billion yen, smaller than expected. Imports fell 7.7%, more than the 6.7% decline predicted.

“Tariffs remain the main threat to Japan’s trade outlook,” said Stefan Angrick of Moody’s Analytics. “Even with a partial deal, pre-Trump trade conditions are unlikely to return.”

The Bank of Japan warned this week that external trade and global uncertainties are likely to weigh on corporate profits and economic growth. Japan’s GDP contracted 0.2% in the first quarter of 2025, the first decline in a year.

Trade talks between the U.S. and Japan remain stalled after six rounds of negotiations. President Trump called Japan “tough” in talks, while Prime Minister Shigeru Ishiba reiterated the automotive sector remains a strategic priority.