The Japanese yen appreciated to around 146 per US dollar on Thursday, extending gains from the previous session as Treasury yields fell sharply, weighing on the greenback. The move also reflects growing investor caution amid rising global trade tensions.
Adding to market jitters, US President Donald Trump announced a new 50% tariff on Brazilian imports, effective August 1, citing what he described as unfair trade practices. The decision comes on the heels of an earlier 25% tariff on Japanese goods, also set to begin on the same date, further escalating trade friction between key economies.
At the same time, US-Japan trade talks have hit a roadblock, particularly over Japan’s protection of its rice sector. Trump has ruled out any deadline extensions, hardening his stance as negotiations stall.
In response, Japanese Prime Minister Shigeru Ishiba called the US measures “truly regrettable” but emphasized Japan’s commitment to continue negotiations aimed at reaching a mutually beneficial agreement.
A Japanese think tank has estimated that these new tariffs could shave 0.8% off Japan’s GDP in 2025, with a cumulative economic impact of 1.9% by 2029 — raising concerns over the broader fallout for Japan’s export-driven economy.
As tensions rise and risk sentiment shifts, the yen is gaining support as a safe-haven currency, with investors seeking shelter from volatility tied to trade policy uncertainty and weakening US economic signals.
