yen slides as trump announces 25% tariffs on japanese imports

2025-07-08 general

tokyo, Tuesday, 8 July 2025.
the yen weakened to 146 against the dollar following president trump’s tariff announcement. the new tariffs, set to begin august 1, add to existing economic pressures. experts suggest this move complicates the bank of japan’s monetary policy decisions, especially regarding interest rate hikes. the tariffs also cast a shadow over japanese semiconductor firms like tsmc, potentially affecting their global competitiveness. this situation is further intensified by concerns of rising inflation in the us.

market reaction

The yen’s decline was evident in early Tokyo trading, with the currency hitting ¥146.02-03 against the dollar, a decrease of ¥0.83 from the previous day [1]. This drop reflects investor concerns that the tariffs will lead to increased inflation in the U.S., while simultaneously weakening the Japanese economy [1]. The New York foreign exchange market echoed this sentiment, with the yen closing at ¥146.00-10 per dollar, marking a ¥1.10 decline from levels seen before the three-day weekend [2]. These movements highlight the immediate impact of the tariff announcement on currency valuations.

investor sentiment and expert analysis

Market analysts are wary of the potential long-term effects. Mark Chandler of Bannockburn Global Forex described president trump’s communication as ‘callous and insolent,’ reflecting broader unease about the administration’s trade policies [2]. This sentiment is compounded by fears that the tariffs will hinder the bank of japan’s ability to implement further interest rate hikes [1][2]. A currency dealer at a Japanese bank noted that negotiations could still occur before the august 1 deadline, leading to some cautious buying back of the yen after the initial sell-off [2].

impact on japanese stocks

The announcement has already impacted stock values. U.S.-listed shares of toyota motor and honda motor both fell by approximately 4% following president trump’s tariff declaration [5]. These declines illustrate the immediate investor reaction to the potential harm to japanese exporters. The Nikkei also reported that the yen has weakened against the euro, reaching levels of ¥171.34-38 per euro, a decrease of ¥0.82, marking a near one-year low since late july 2024 [1]. This broad weakening of the yen signals potential challenges for japanese assets.

tariffs on other nations

President trump’s announcement included tariffs on other countries as well. South korea faces the same 25% tariff as japan, while south africa will see a 30% tariff, and myanmar a 40% tariff [2]. These measures are part of a broader strategy, with president trump also suggesting a 10% tariff increase on any nation aligning with ‘anti-american’ brics policies [7]. These widespread tariffs add complexity to global trade dynamics, potentially affecting supply chains and international relations. The chinese foreign ministry has reiterated that ‘there are no winners in a trade war’ [7].

negotiation outlook

Despite the imposition of tariffs, some remain optimistic about potential negotiations. An executive in the ishiba administration views president trump’s letter as a de facto extension of the negotiation period, suggesting room for continued dialogue [4]. However, experts caution that reaching an agreement will be challenging [6]. President trump has consistently voiced concerns over the trade deficit with japan, particularly regarding automobiles, making concessions difficult without significant proposals from the japanese side [6]. The coming weeks will be crucial in determining the future of trade relations between the two countries [6].

Bronnen

trade tariffs currency exchange