Canada trailed 13-5 at the half before the Japanese pulled away. Matt Mullins of Belleville, Ont., and Djustice Sears-Duru of Oakville, Ont., scored tries in a losing cause.
The Canadian under-20 men opened with a 37-25 loss to Namibia before bouncing back to tie Uruguay 18-18.
Canada will play host winless Hong Kong in its final game Saturday. Tonga will take on Japan for the championship in a clash of 2-1-0 teams.
The Canadians were runners-up at the 2013 tournament won by Italy.
The Junior World Trophy is the IRB' second-tier under-20 event. The top 12 countries will compete at the IRB Junior World Championship in June in New Zealand.
England won last year's top-tier event, defeating Wales in the final.