Japan’s exports went down for the second month in a row. In June 2025, exports dropped by 0.5% compared to last year. This came as a surprise because experts had expected a small rise. In May too, exports had already fallen by 1.7%.
One of the main reasons for this drop is weaker trade with China and the United States. Exports to China, Japan’s biggest trading partner, fell by 4.7%. Exports to the U.S. dropped even more—by 11.4%. This shows that trade between Japan and the U.S. is facing problems.
There is also tension because of a new U.S. tariff. A 25% tax on Japanese imports, including cars, is set to begin on August 1, 2025. Former U.S. President Donald Trump has said this tariff will stay unless a new trade deal is signed. However, no agreement has been reached yet.
This situation is worrying for Japan. Cars make up more than 28% of what Japan exports to the U.S. Also, exports (goods and services sold to other countries) made up around 22% of Japan’s total economy in 2023. If exports keep falling and tariffs go up, Japan could enter a technical recession—which means the economy shrinks for two quarters in a row.
Japan’s trade leader, Ryosei Akazawa, says that Japan wants a fair deal. The country is asking the U.S. to protect its car industry and says it won’t make quick decisions, especially if the deal isn’t good for its farmers.
With the August 1 deadline getting closer, all eyes are on whether Japan and the U.S. can strike a deal in time to avoid more damage to Japan’s economy.