Japan records trade deficit as exports suffer from Trump's tariffs

Key Points

• Japan recorded a 637.6 billion yen trade deficit in May as exports fell 1.7% and imports plunged 7.7%, driven by a nearly 25% drop in auto shipments to the U.S.
• President Trump has imposed a 25% additional tariff on Japanese autos (24% on other goods) and suggested auto tariffs may rise further.
• Prime Minister Shigeru Ishiba and Trump failed to reach an agreement at the G7 summit, with Tokyo emphasizing both its defense alliance with the U.S. and the protection of national interests.
• Japan’s auto industry, a key economic pillar, exports over 1 million vehicles annually to the U.S., with firms like Toyota and Honda producing cars in North America and supporting local jobs.

TOKYO (AP) — Japan's exports fell in May as shipments of autos to the U.S. dropped nearly 25% from a year earlier due to higher tariffs imposed by President Donald Trump.

Exports fell 1.7% year-on-year, which was less than the decline analysts had forecast, the Finance Ministry reported Wednesday. Imports sank 7.7%, reflecting weakening domestic demand and worse than the 2% fall recorded in April.

The trade deficit in May was 637.6 billion yen, or $4.4 billion.

Japan has yet to reach a deal with Trump on resolving the tariffs issue, with Prime Minister Shigeru Ishiba saying after he met with the U.S. president at the Group of Seven summit in Canada earlier this week that the two sides were unable to agree on some points.

Trump has imposed a 25% additional tariff on Japanese autos and a 24% tariff on other goods. He recently said the auto tariff may become even higher.

Ishiba has emphasized that Japan is an important ally in a key bilateral defense alliance with Washington and that he is pushing to protect his own country's national interests.

The auto industry is a pillar of Japan’s economy, and Japan exports more than a million vehicles to the U.S. a year. Tokyo has repeatedly stressed that automakers like Toyota and Honda produce cars in North America, contributing to the economy and creating jobs.

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