Japan’s exports took a hit in May, with a 1.7% year-on-year decline, driven by a significant drop of nearly 25% in auto shipments to the U.S. Analysts had predicted a more severe decline, but the actual figures were slightly better. On the other hand, imports plunged by 7.7%, reflecting weakened domestic demand. The trade deficit for May stood at 637.6 billion yen ($4.4 billion). Despite efforts to negotiate a resolution, Japan has not yet reached an agreement with the U.S. regarding the tariffs issue. President Donald Trump’s imposition of a 25% additional tariff on Japanese autos and a 24% tariff on other goods has strained the trade relationship. Prime Minister Shigeru Ishiba emphasized the importance of Japan as a key ally in the bilateral defense alliance with the U.S. and highlighted the contributions of Japanese automakers like Toyota and Honda to the North American economy. The auto industry, a cornerstone of Japan’s economy, faces uncertainty as Trump hinted at potentially increasing auto tariffs further. The ongoing trade tensions underscore the challenges faced by both countries in finding common ground on trade policies.