Japan trade deficit May 2025 rose to ¥637.61 billion ($4.38 billion) as auto exports to the United States dropped sharply due to new U.S. tariffs imposed by President Donald Trump, government data revealed on Wednesday. This marks Japan’s second consecutive monthly deficit. Total exports fell 1.7% year-on-year to ¥8.13 trillion, the first drop in eight months. Exports to the U.S. declined by 11.1%, significantly contributing to the widening trade gap.
Imports dropped 7.7% to ¥8.77 trillion, reflecting lower energy prices, including crude oil from the UAE and coal from Australia, according to the Finance Ministry’s preliminary report. Japan’s trade surplus with the U.S. narrowed to ¥451.7 billion, down 4.7% from the previous year. Exports totaled ¥1.51 trillion, while imports from the U.S. fell 13.5% to ¥1.06 trillion.
Auto-related exports took a major hit. Shipments of automobiles to the U.S. plunged 24.7%, and auto parts dropped 19.0% in value. Export volume also declined by 3.9%, suggesting a shift toward lower-priced models or price cuts by automakers in response to the 25% tariffs. “The effects of the tariffs are now becoming visible,” said Takafumi Fujita, economist at Meiji Yasuda Research Institute. He added that Japan’s auto exports will likely remain under pressure, posing risks for the national economy.
With China, Japan recorded its 50th straight monthly deficit, rising 17.2% year-on-year to ¥624.87 billion. Exports fell 8.8%, while imports dipped 2.2%. Meanwhile, Japan’s trade surplus with the rest of Asia surged over 12 times to ¥313.35 billion. The European Union remained in deficit territory for the 16th consecutive month, with Japan posting a ¥308.9 billion shortfall. Experts warn that the Japan trade deficit May 2025 highlights growing pressure on export sectors and signals further challenges ahead in Tokyo’s negotiations with Washington.
Experts warn that the Japan trade deficit in May 2025 highlights increasing pressure on key export sectors. It also signals new challenges in Tokyo’s trade talks with Washington. Policymakers may need to expand trade diversification and consider fresh stimulus measures. These steps could help support domestic industries. Analysts expect more volatility in the coming months. This is especially likely if U.S. protectionist policies continue or global demand weakens further.
