Japan’s Nikkei falls as US tariffs and a stronger yen disrupt the market

Japan’s Nikkei dipped on Tuesday as markets worried about a trade war, new US tariffs were enforced, and a stronger yen exacerbated investors’ anxieties. U.S. President Donald Trump imposed fresh 25% tariffs on imports from Mexico and Canada and a doubling of penalties on Chinese goods to 20%, sparking new trade tensions with the country’s top three trading partners.

The Nikkei fell as much as 2.6% to its lowest level since September 18 before recovering to close down 1.2% at 37,331.18. The broader Topix index ended 0.7% down at 2,710.18. Automakers fell as the yen surged to its highest level since early December versus the US dollar, with Hino Motors losing the most at 3.3%.

On Monday, Trump claimed he informed Japan and China’s leaders that continuing to devalue their currencies would be unfair to the United States. The sudden drop in shares was a “combination of the yen strengthening and fear of tariff policies, as well as the tech weakness since last week, all mixed,” said Nomura Securities’ senior macro analyst, Naka Matsuzawa. Concerns about US growth might also be at play, he said. Advantest, a producer of chip testing equipment, slumped 4.3% after US chip giant Nvidia (NASDAQ: NVDA), a client, declined overnight. SoftBank Group, which invests in AI-focused startups, lost 4.8%. Among other Nikkei heavyweights, Uniqlo parent Fast Retailing fell 1.2%, while Seven & I Holdings dropped 6.9%.