Japan’s exports declined in May for the first time in eight months, as major carmakers such as Toyota were hit by sweeping US tariffs. The failure of Tokyo to secure a trade agreement in June is expected to add further strain.
Following the Group of Seven summit in Canada in June, Prime Minister Shigeru Ishiba announced that Japan had not reached a comprehensive tariff deal with the United States due to continued disagreements between the two countries.
Tokyo was trying to convince Washington to exempt Japanese carmakers from a 25% tariff specifically targeting the car industry – measures that are putting significant pressure on Japan’s manufacturing base. In addition, Japan is facing the threat of a 24% ‘reciprocal’ tariff set to take effect on July 9 if a deal cannot be reached.
Last year, Japan’s auto sector made up roughly 28% of the 21 trillion yen (approximately US$145 billion) worth of goods it exported to the US.
In May, Japan’s overall exports fell 1.7% year-on-year to 8.1 trillion yen, according to government data. This was better than the median forecast of a 3.8% decline but reversed a 2% gain in April.
Exports to the US plunged 11.1% compared to the same month a year earlier – the steepest monthly drop since February 2021 – largely due to a 24.7% fall in automobile shipments and a 19% drop in auto parts. A stronger yen also reduced the value of Japanese exports. Shipments to China also declined by 8.8%.
