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13h ago

U.S. Tariffs Drive Sharp May Export Decline as Japan-U.S. Trade Talks Stall

Exports fell 1.7% year-on-year in May with U.S. shipments plunging 11.1%, raising pressure ahead of a July 9 deadline to avoid reciprocal tariffs.

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

  • Japan’s total exports dropped 1.7% in May, the steepest decline since September 2024, while imports slid 7.7% and the nation ran a 637.6 billion yen trade deficit.
  • Exports to the United States plunged 11.1%, reflecting the impact of 25% auto tariffs and the threat of a 24% reciprocal tariff if no deal is reached by July 9.
  • Six rounds of negotiations between Japanese negotiator Ryosei Akazawa and U.S. Commerce Secretary Howard Lutnick have yet to yield an agreement to suspend additional duties.
  • The economy contracted 0.2% in the first quarter of 2025 and the Bank of Japan kept interest rates unchanged while decelerating its balance sheet drawdown.
  • An estimate by the Japan Research Institute warns that full implementation of threatened U.S. tariffs could slash U.S.-bound exports by 20% to 30%.