Japan's stocks slump on Trump's 24% tariffs and stronger yen
Japan's stocks plunged after U.S. President Donald Trump slapped the nation with a 24% levy as part of tariffs on trading partners worldwide. A stronger yen also dragged exporter shares lower.
The Topix Index fell 4% to 2,544.41 as of 9:12 a.m. Tokyo time, while the blue-chip Nikkei declined 4.1% to 34,281.76. Contracts traded in Singapore initially spiked, then fell as details of the tariffs rolled out, suggesting the market will face volatility Thursday as investors digest the news.
"Overall I think this was on the harder side of expectations,' said Nick Twidale, chief analyst at AT Global Markets in Sydney. "Japan and most of Asia took a hit — I think stocks will take a battering in Asia today, alongside most currencies, although the yen is a different story and may appreciate on its haven status.'
Trump also reiterated 25% tariff on autos, which may weigh on carmakers that are already under-performing the broader Topix index this year. The yen extended gains to strengthen 0.8% versus the dollar, while U.S. equity futures sank amid concern the escalating trade war will harm the nation's economy.
Exporting companies such as electric appliances and the transportation sector were one of the leading losses on the Topix index.
Japan's benchmark Topix is down more than 8% this year as jitters over tariff concerns damped investor sentiment. The exporter- and tech-heavy Nikkei 225 has been hit harder, tumbling more than 15% from its December peak to enter a correction.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NHK
an hour ago
- NHK
US proposed allowing Iran limited low-level uranium enrichment, report says
A US media outlet says the United States has proposed allowing Iran to conduct limited low-level uranium enrichment on its own soil. President Donald Trump quickly posted a denial. On Monday, Axios reported what it said were the details of a US proposal made to Iran last Saturday, citing sources with direct knowledge of the matter. The Trump administration has been pressing Iran to completely halt its uranium enrichment. The two sides have been engaged in talks, but have failed to narrow their differences. Axios says the latest proposal would not allow Iran to build new enrichment facilities and calls for a halt to new research and development on centrifuges. However, the report says Iran would be permitted to engage in limited enrichment activities at a concentration level of 3 percent -- a key threshold for the peaceful use of uranium. The Axios report says the proposal shows "far more flexibility" than past US demands. Trump responded in a social media post that "Under our potential Agreement -- WE WILL NOT ALLOW ANY ENRICHMENT OF URANIUM!" Also on Monday, Reuters news agency quoted a senior diplomat close to Iran's negotiating team as saying that "Iran is drafting a negative response to the US proposal."
Yomiuri Shimbun
an hour ago
- Yomiuri Shimbun
TSMC Says Tariffs Have Some Impact but AI Demand Robust
Reuters The TSMC logo is displayed on a building in Hsinchu, Taiwan April 15, 2025. HSINCHU, Taiwan, June 3 (Reuters) – Taiwan's TSMC said on Tuesday that U.S. tariffs are having some impact on the company but demand for artificial intelligence (AI) remains strong and continues to outpace supply. U.S. President Donald Trump's trade policies have created much uncertainty for the global chip industry and TSMC, the top producer of the world's most advanced semiconductors whose customers include Apple AAPL.O and Nvidia NVDA.O. Chief Executive C.C. Wei, speaking at the company's annual shareholders meeting in the northern Taiwanese city of Hsinchu, said they have not seen any changes in customer behavior due to tariff uncertainty and the situation may become clearer in coming months. 'Tariffs do have some impact on TSMC, but not directly. That's because tariffs are imposed on importers, not exporters. TSMC is an exporter. However, tariffs can lead to slightly higher prices, and when prices go up, demand may go down,' he said. 'If demand drops, TSMC's business could be affected. But I can assure you that AI demand has always been very strong and it's consistently outpacing supply.' In April, the company, the world's largest contract chipmaker, gave a bullish outlook for the year on robust demand for AI applications. In a sign of the strength of demand, Wei said TSMC's job is to provide its customers 'with enough chips, and we're working hard on that. 'Working hard' means it's still not enough.' Asked about media reports that the company has been looking at building chip factories in the United Arab Emirates, Wei said TSMC has no plans for any such plants in the Middle East. Wei was also asked about TSMC's suspension of shipments to China-based chip designer Sophgo after its chip matched the one found on the Huawei AI processor, a Chinese company that has been the focus of sweeping U.S. government curbs. He said the company works closely with the Taiwan and U.S. governments to comply with legal and regulatory requirements. TSMC also faces broader political risk as China steps up military pressure on democratically and separately governed Taiwan, which Beijing views as 'sacred' Chinese territory. 'If something happens that we don't want to happen, it's a matter for governments, not for TSMC alone,' Wei said, responding to a question about a possible crisis in the Taiwan Strait.
Japan Times
2 hours ago
- Japan Times
China's rare earths grip gives Xi leverage in U.S. trade duel
After the U.S. and China agreed in Geneva to lower tariffs from astronomical heights, tensions are now surging over access to chips and rare earths. And Beijing increasingly appears to have an edge. President Donald Trump on Friday accused China of violating the agreement struck last month, and sought a call with Xi Jinping to sort things out. The main sticking point appears to be critical minerals, with U.S. officials complaining Beijing hadn't sped up exports needed for cutting-edge electronics. The U.S. has said the decision to reduce tariffs hinged on a Chinese agreement to lift controls on some rare earths. "It's going to require a discussion between the presidents of the two countries,' Deputy U.S. Treasury Secretary Michael Faulkender said Monday in a brief interview. As China keeps constraints on metals critical to America's national security, Washington is ramping up its own tech restrictions. Over the past three weeks, the U.S. has barred the shipping of critical jet engine parts to China, throttled Beijing's access to chip-design software and slapped fresh curbs on Huawei chips. That's sparked anger in the world's second-largest economy. Chinese officials on Monday vowed to respond and accused the U.S. of undermining the Geneva consensus, dimming the chance of a leaders call. For years, Washington was believed to have the advantage over China in the fight for technological dominance thanks to its grip on semiconductor supply chains. Xi has shown he's ready to fight back, in part by tightening controls over critical minerals in a bid to force the U.S. into easing its restrictions. While the Trump administration has shown little sign of relenting on chip curbs, it has discovered replacing China as a supplier of rare earths could take years and cause pain for key industries. The Asian nation produces almost 70% of the world's metals crucial for making fighter jets, nuclear reactor control rods and other critical technology. China is gaining ground in the standoff, according to Cory Combs, associate director at consultancy Trivium China who specializes in supply chains. Washington is still a decade away from securing rare earths independently from Beijing, while Chinese firms have developed capable alternatives to most U.S. chips, he said. U.S. President Donald Trump (left) and Chinese leader Xi Jinping | Bloomberg "China's leverage is more durable than a lot of the U.S. leverage at this stage,' he added. "I'm not sure if this works out well for the U.S..' The dispute has the potential to endanger the fragile trade truce between Washington and Beijing. In theory, tariffs could snap back to more than 100% after the 90-day negotiating period. Trump has incentive to avoid that, after the U.S. economy shrank at the start of the year and markets panicked under the weight of huge tariffs. Supply-chain warfare As part of the agreement struck in Switzerland, China promised to remove or suspend "non-tariff countermeasures taken against the United States' after Trump announced punitive duties in April. The Chinese government did not elaborate on what that entailed. Rare-earth exporters must apply for permits from the Ministry of Commerce. That process is opaque and difficult to verify, allowing officials to turn it on and off again with little visibility from the outside world. The paperwork involved has caused hold-ups, which are only now showing signs of easing. "We are seeing some approvals come through — certainly slower than industry would like,' said Michael Hart, president of the American Chamber of Commerce in China. "Some of the delay is related to China working through their new system.' For some U.S. firms, the metals can't flow fast enough. Ford temporarily shuttered a factory in Chicago last month because it ran short of rare earth components. At a long-running U.S. defense aviation conference Combs recently attended, rare earths were a top talking point. Attendees took the threat "very seriously,' he said. Such concerns show why export controls have become a central pillar of China's supply-chain warfare: They can hurt U.S. industries while causing little harm at home. Tariffs, in comparison, can be costly both for Chinese manufacturers and consumers. Giving Xi even greater leverage, the impact of China's rare earths controls aren't limited to American importers. India's largest electric scooter maker, Bajaj Auto, warned last week that the country's vehicle production will take a hit as early as July if China doesn't resume shipments. "Supplies and stocks are getting depleted as we speak,' said the firm's executive director Rakesh Sharma. Over 30 such applications have been made for shipping to Indian companies — and none have been approved so far, Sharma added. Companies from another large Asian importer only started getting permits last week, according to an official from the country who asked not to be named. China's squeeze on all countries highlights another risk for Trump: Strategic U.S. sectors, such as batteries and semiconductors, depend on South Korea and Japan for components. If Beijing cuts off those U.S. allies from rare earths, American firms could face even more pain. Japan's top trade negotiator Ryosei Akazawa called rare earths "undoubtedly a critical theme for economic security,' after emerging Friday from his latest round of trade negotiations with U.S. counterparts. Next battleground Critical minerals were flagged as the next battleground in U.S.-China ties at the height of Trump's first trade war, when Xi visited one of his country's biggest permanent magnet producers — a trip widely seen as an implied threat. In July 2023, Beijing followed through by slapping export curbs on gallium and germanium — minerals used to make semiconductors — after the U.S. sought to restrict China's access to artificial intelligence chips. Miners at the Bayan Obo mine in Inner Mongolia, China, in 2011 | REUTERS Recognizing the danger, the U.S. Department of Defense has pledged to develop a complete mine-to-magnet rare earth supply chain for all domestic defense needs by 2027. A lack of commercially viable natural reserves, few engineers trained in the extraction process and limited numbers of companies able to compete at the industry's thin price margins are just some of the challenges the department faces. The U.S. national security establishment has known about its dependency on China for years yet hasn't come up with a solution at scale, according to Liza Tobin, managing director of risk advisory firm Garnaut Global. Despite that, she said, the Trump adminstration isn't making concessions. "Over the last couple of weeks, you've seen them doubling down with this empowered Commerce Department strengthening and broadening the export controls,' she said. Catching up will depend on how deeply Washington is willing to spend. Trump is already tapping foreign capital. During the president's trip last month to the Middle East, MP Materials — the sole U.S. producer of rare earths — signed a deal with Saudi Arabia's top mining firm to develop a supply chain. The U.S. could also intensify cooperation with Australia's Lynas Rare Earths — the largest producer of separated rare earths outside of China, although that operation still sends some of its oxides to the Asian nation for refining. While capacity is building in Brazil, South Africa, Japan and Vietnam, they can't offer an immediate fix for U.S. firms. Beijing hasn't exhausted its leverage. Restrictions so far have targeted medium- and heavy-rare earths, which are concentrated in defense applications. Weaponizing light rare earths — such as neodymium and praseodymium — could deal an even bigger blow to the U.S. economy, as they're more widespread in consumer goods. For now, Xi is unlikely to pursue the most extreme options as it could invite blowback from vulnerable industries, said Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute's Center for China Analysis. "Beijing's controls on rare earths are a warning against further escalation,' he added. "But if U.S.-China tensions worsen again, then Beijing may start to inflict real pain on U.S. defense supply chains.'
