Japan Indexes Plunge Weekly 7% After U.S. Announces New Tariffs On Key Trading Partners

Akira Ito
04 Apr, 2025
Tokyo

Stock market indexes in Tokyo extended weekly losses as investors reacted to steep U.S. tariffs on Japanese exports, and the yen edged higher. 

The Nikkei Stock Average declined nearly 3%, and the broader TOPIX fell 3.3%, and benchmark indexes extended weekly losses to 5.8% and 7%, respectively.  

Japanese investors sold stocks as investors worried that escalating trade tensions with the U.S. are likely to dampen global trade and negatively impact corporate earnings. 

The U.S., in a historic shift of its trade policy, announced a whirlwind of tariffs on all imports, primarily targeting its key trading partners. 

The Trump administration slapped a 24% import tax on all Japanese goods and a 25% tax on Japanese vehicles, hitting hard the export-driven economy of Japan. 

For more than two decades, Japan has been struggling with anemic economic growth, and exports played a key role in supporting job growth.

However, with the stiff tariffs, Japan is likely to face a sharp economic slowdown and could halt its labor market expansion of the last 35 months.

Closer to home, Japan's real household spending decreased for the first time in three months, after consumers continued to trim food purchases amid surging prices. 

After adjusting for inflation, Japan's household spending declined 0.5% in March, according to an update from the Ministry of Internal Affairs and Communications. 

Household spending is a key indicator of private consumption and accounts for more than half of Japan's gross domestic product. 

The average monthly income of a salaried household with a family of two or more decreased 2.3% from a year ago, after adjusting for inflation, to 571,993 yen.

In nominal terms, the average monthly income per household stood at 571,993 yen, increased 1.9% in nominal terms, but down 2.3% in real terms from the previous year.

The average of monthly consumption expenditures per household for February 2025 was 290,511 yen, up 3.8% in nominal terms but down 0.5% in real terms from the previous year.

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average declined 2.6% to 33,825.07, and the broader TOPIX index fell 3.3% to 2,484.09. 

Financial stocks led the decline in Tokyo trading, amid worries about a sharp slowdown in business activities. 

Mitsubishi UFJ Financial dropped 8.8% to ¥1,668.50, Sumitomo Mitsui Financial fell 8% to ¥3,125.0, and Mizuho Financial plunged 11.3% to ¥3,277.0.

Toyota Motor fell 4.4% to ¥2,407.50, Nissan Motor dropped 5.2% to ¥341.50, and Honda Motor decreased 5.5% to ¥1,257.0.