Exports from Japan took a sharp turn downward in May—with a massive decline in car exports to the U.S. driving the drop.
The details: Overall, Japan’s exports slid 1.7% year over year, the sharpest decline since September 2024—but softer than the 3.8% drop expected. However, the country’s decline in shipments to the U.S. was much more dire.
Total Japanese exports to the U.S. fell 11.1% year-over-year in May.
The country’s exports of automobiles to the States dropped 24.7%.
In 2024, Japanese automakers accounted for 28.3% of all the country’s exports to the U.S.—a clear indication of how valuable the U.S. car market is to Japan’s GDP, which totaled 609.29 trillion yen ($4.01 trillion), last year.
Why it matters: As the home base for several car brands, including Toyota, Honda, Subaru, Mazda, and Nissan (to name a few), Japan’s decline in motor vehicle exports likely signals some inventory challenges ahead for affiliated dealers in the U.S.
Between the lines: Japan’s motor vehicles exports to the U.S will get even more challenging in the weeks ahead, given the tariffs.
There is currently a 25% levy on auto and steel exports to the U.S. from Japan.
Japan is also facing a 24% “reciprocal” tariff on all other exports starting on July 9.
What they’re saying: “The deteriorating trade outlook doesn’t bode well for exports in the months ahead. Even if Japan and the U.S. reach a deal that softens some of the more punitive U.S. tariffs, a full return to pre-Trump trade terms is unlikely,” said Stefan Angrick, Head of Japan and Frontier Markets Economics, Moody’s Analytics (via CNBC).
Bottom line: Japan’s exports to the U.S. are in sharp decline—especially car shipments, which plunged nearly 25% year-over-year in May—highlighting just how vulnerable the country’s economy is to U.S. trade tensions. With tariffs already in place and more on the way, U.S. dealers could soon face inventory shortages, while Japanese automakers brace for even steeper headwinds.
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Sources: 1. Similarweb, Traffic Report (Cars.com, Autotrader, TrueCar, CARFAX Listings (defined as CARFAX Total visits minus Vehicle History Reports traffic), Q1'25, USA. 2. CarGurus analysis of US dealers that changed a vehicle price based on NBDR recommendations compared to vehicles without an NBDR- informed price change from Nov 2023 through Dec 2024.
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