MercoPress. South Atlantic News Agency

Trump's tariffs already have repercussions in Japan

Trump's economic plans might impact the exchange rate between the US dollar and the yen

Hours after US President Donald Trump announced the imposition of 25% tariffs on Mexican and Canadian products, the Nikkei index in Tokyo, which groups together the 225 most representative stocks in the market, plummeted by 2.5%. The White House measures over the weekend impacted the Japanese capital early Monday morning.

In this scenario, Japan's Finance Minister Katsunobu Kato said his country would be closely monitoring the impact of Trump's measures on the yen. ”We need to carefully see how the exchange rate and other factors will be affected and what form US monetary policy will take in the future,” Kato told Fuji Television Sunday. He also said Japan is very concerned about how the tariffs may impact the global economy.

Japan's Trade Ministry and the Japan External Trade Organization (JETRO) also announced consultation services for Japanese companies fearing the consequences of the Republican administration's drive were available, particularly for companies feeding autoparts to plants in Mexico.

As Japanese authorities are concerned about the future parity between the US dollar and the yen, Prime Minister Shigeru Ishiba is scheduled to meet with Trump on Feb. 7. Regarding his recent telematic conference with US Treasury Secretary Scott Bessent, Kato admitted that the exchange rate was not discussed specifically. “We confirmed that we will closely discuss foreign exchange as we look at the financial and economic conditions as a whole,” he said. ”I got the impression that he is a very calm person.”

A weak yen has pushed up the prices of imported food, energy, and materials, thus triggering inflation, amid persistent pressure on the Bank of Japan to raise interest rates gradually. Japan intervened in the foreign exchange market multiple times last year to prop up the yen. “When import prices rise, we will see cost-push inflation,” Kato said. ”On the other hand, prices also increase when domestic demand expands. So, there are several phases and I think it is important to carefully assess each situation and take the necessary measures,” he added.