Japan May Slow Trade Negotiations Pace After U.S. Court Ruling, Capital Spending Growth Accelerated In Second Quarter

Akira Ito
01 Sep, 2025
New York City

Japan's indexes turned sharply lower on Monday, reflecting Friday's weakness on Wall Street. 

The Nikkei 225 Stock Average decreased 1.4%, and the broader Topix fell 0.5%, and the weakness in technology stocks dominated the market sell-off. 

The U.S. Court of Appeals for the Federal Circuit ruled that the Trump administration's tariffs are illegal and do not comply with the spirit of the law.

The import duty imposed by the U.S. president was first ruled illegal by the Court of International Trade in Manhattan, and the case is likely to land soon in the U.S. Supreme Court.

"Once again, a court has ruled that the president cannot invent a fake economic emergency to justify billions of dollars in tariffs," New York Attorney General Letitia James said in a statement. 

"These tariffs are a tax on Americans—they raise costs for working families and businesses throughout our country, causing more inflation and job losses," James noted in the statement.

However, the court allowed the tariffs to stay in place until October 14, allowing the Trump administration to seek the final verdict from the U.S. Supreme Court. 

The latest court ruling gave additional breathing room to trade negotiators in Japan, India, and China, and Japan is likely to slow its pace of negotiations while there is greater legal clarity.

On the domestic economic front, Japanese companies accelerated capital spending in the second quarter by 7.6%, from 6.4% in the first quarter, the Ministry of Finance said in a release on Monday. 

The robust spending on plants, property, and equipment was broad-based, with investment in the manufacturing sector soaring 16.4% and in the non-manufacturing sector increasing at a modest pace of 3%.

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 1.4% to 42,127.12, and the broader Topix declined 0.5% to 3,059.66. 

Artificial intelligence-related stock led the downturn in Monday's trading. 

Tokyo Electron decreased 1.8% to ¥20,285.0, Advantest Corp. declined 7.7% to €61.60, and Disco Corp. fell 7.7% to ¥38,160.0.

Nippon Yusen KK advanced 0.5% to ¥5,357.0, Mitsui O.S.K. Lines eased 0.5% to ¥4,728.0, and Kawasaki Kisen Kaisha Ltd. inched higher 0.1%.