Tokyo. Japan recorded a trade deficit in May as exports slipped, largely due to a sharp decline in auto shipments to the United States following higher tariffs imposed by President Donald Trump.

Exports fell 1.7 percent year-on-year, a smaller drop than analysts had forecast, the Finance Ministry reported Wednesday. Imports, however, plunged 7.7 percent, a steeper fall than April’s 2 percent decline, reflecting weakening domestic demand.

The trade deficit for May totaled 637.6 billion yen, or $4.4 billion.

Japan has yet to reach a resolution with the US over the tariff dispute. Prime Minister Shigeru Ishiba said after meeting with Trump at the recent Group of Seven summit in Canada that the two sides remained at odds on key issues.

Trump has imposed an additional 25 percent tariff on Japanese automobiles and a 24 percent tariff on other products, warning that duties on cars could rise even further.

Ishiba has stressed Japan’s status as a vital US ally, particularly in defense, and said he is committed to safeguarding Japan’s national interests.

The auto industry is a cornerstone of Japan’s economy, with more than a million vehicles exported to the US annually. Japanese officials have repeatedly pointed out that automakers like Toyota and Honda manufacture many of their vehicles in North America, supporting the local economy and creating American jobs.