Japan’s exports fell 0.5% yoy to JPY 9,162.6 billion in June 2025, marking the second straight monthly decline and missing market forecasts for a 0.5% increase, as rising U.S. tariffs weighed on demand. Exports to the U.S. plunged 11.4%, the third consecutive monthly drop, driven by weaker shipments of cars, auto parts, and pharmaceuticals. Exports to China also slipped 4.7%, while shipments to the EU, Russia, and ASEAN rose 3.6%, 19.2%, and 4.9%, respectively. President Trump has repeatedly criticized Japan for its trade imbalance and warned of a 25% reciprocal tariff set to take effect on August 1. In response, Japanese officials have made several trips to Washington for talks, though a formal agreement remains out of reach. Meanwhile, Japanese automakers have avoided steep price hikes by discounting exports and absorbing tariff costs, often squeezing profit margins. In 2024, Japan exported JPY 21 trillion worth of goods to the U.S., with vehicles making up nearly 28% of the total.