Japan recorded a trade deficit of 637.6 billion yen ($4.4 billion) in May, marking the second consecutive month of red ink as exports declined amid falling demand for automobiles in the United States, according to data released Wednesday by the Ministry of Finance. Overall exports fell 1.7 percent year-on-year to 8.13 trillion yen, the first annual decline in eight months. The drop was largely driven by a steep 11.1 percent fall in exports to the U.S., led by a 24.7 percent plunge in automobile shipments. Japanese auto exports to the American market have been a critical component of the nation’s trade performance, and their sharp contraction significantly weighed on the monthly trade balance. Imports also declined, falling 7.7 percent from the previous year to 8.77 trillion yen. This marks the second straight month of import contraction, reflecting a slowdown in domestic demand as well as easing global commodity prices. Japan’s trade with the United States remained in surplus, but the gap narrowed. The country posted a 451.7 billion yen surplus with the U.S. in May, down 4.7 percent from a year earlier. Despite the surplus, the decline underscores weakening export strength in one of Japan’s most important markets. Meanwhile, trade with China remained deeply negative. Japan logged a 624.9 billion yen deficit with its largest trading partner, marking the 50th consecutive month of trade shortfalls with the world’s second-largest economy. The persistent deficit with China highlights structural imbalances in bilateral trade, where imports of Chinese machinery and consumer goods continue to outpace Japanese exports. The weak trade data comes as Japan’s export-driven economy faces mounting challenges from global economic uncertainty, fluctuating demand in key markets, and shifting supply chains. Analysts note that the sharp drop in auto exports to the U.S. may be linked to both cyclical factors and evolving regulatory standards that are affecting traditional automobile trade flows. Japan’s trade figures will be closely watched in the coming months for signs of recovery or further deterioration, especially as the global economy grapples with inflationary pressures and geopolitical tensions. Policymakers are likely to monitor developments in both the U.S. and Chinese markets as they assess the outlook for Japan’s external sector. – By MENA Newswire News Desk.