FX.co ★ Japanese Shares Drop as Trump Threatens New Tariffs

The Nikkei 225 Index experienced a 1% decline, slipping below the 40,100 mark, while the broader Topix Index decreased by 0.5% to settle at 2,840 on Tuesday. This downturn halted a five-day rally in Japanese equities, prompted by rekindled trade tensions with the United States. President Donald Trump issued threats of imposing additional tariffs on Japanese goods, criticizing Japan for its reluctance to import American rice. He also confirmed the continuation of the existing 25% tariff on Japanese automobile imports, highlighting the ongoing trade imbalance between the two countries. These developments occur just days before a crucial deadline, with investors keenly observing whether Japan can finalize a trade agreement with Washington to avoid the return of the 24% reciprocal tariff rate the following week. In terms of economic data, Japan's latest Tankan survey unveiled an unexpected positive shift in sentiment among large manufacturers in the second quarter, indicating robustness despite escalating trade tensions. Stocks that notably declined included Lasertec, which fell by 4.1%, Disco, down by 1.9%, Sanrio, with a 3% decrease, and Advantest, contracting by 1.8%.