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2d ago

Japan Exports Decline 1.7% in May With U.S. Tariffs Stalling Recovery

Trade negotiations remain stalled with a 24% tariff hike scheduled for July 9 unless Tokyo and Washington reach an agreement.

Newly manufactured cars awaiting export are parked at a port in Yokohama, south of Tokyo, Japan March 27, 2025. REUTERS/Issei Kato/File Photo
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Overview

  • Exports fell 1.7% year-on-year in May, marking the first drop in eight months and driven by an 11.1% plunge in U.S. shipments and an 8.8% decline to China.
  • Automobile exports to the U.S. tumbled 24.7% after Washington imposed a 25% tariff on vehicles and parts, leading Japanese makers to absorb additional costs.
  • Japan ran a trade deficit of ¥637.6 billion in May as imports dropped 7.7%, extending its shortfall for a second consecutive month.
  • The Bank of Japan held interest rates steady and slowed its bond tapering pace, citing elevated risks from trade tensions and slowing overseas demand.
  • Negotiations between Prime Minister Shigeru Ishiba and President Donald Trump have yet to yield a deal before the July 9 deadline that could raise tariffs from 10% to 24% and shave about one percentage point off GDP.