Japan’s Nikkei Slumps as US-China Trade Tensions Escalate

Markets in the Asia-Pacific region experienced mixed trading on Friday, with Japan’s Nikkei 225 and Topix indices taking significant hits amid concerns over escalating trade tensions between the United States and China.

Japan’s Nikkei 225 fell 2.96% to close at 33,585.58, while the broader Topix index dropped 2.85% to 2,466.91. Other Asian markets showed varied performances, with Australia’s S&P/ASX 200 slipping 0.82% and South Korea’s Kospi falling 0.5%. In contrast, Hong Kong’s Hang Seng Index climbed 1.13%, and China’s CSI 300 added 0.41%.

The downturn in Japanese stocks followed Wall Street’s overnight losses after President Donald Trump announced a tariff pause for most countries but maintained and even increased duties on Chinese imports. The White House confirmed that the cumulative tariff rate on Chinese goods now stands at 145%, including a 125% duty increase alongside existing 20% tariffs linked to the fentanyl crisis.

China responded with its own tariff hikes, raising levies on US goods from 84% to 125%. In a statement, China’s State Council reaffirmed its position, declaring that if the US continues imposing tariffs, China will “resolutely counterattack.” Beijing also introduced measures to limit the number of US films allowed into the Chinese market.

The trade tensions triggered heightened volatility across global markets. Overnight, major US indices reversed their previous session’s gains. The S&P 500 dropped 3.46% to 5,268.05, the Nasdaq Composite fell 4.31% to 16,387.31, and the Dow Jones Industrial Average declined 2.5%, shedding 1,014 points.

Investors remain skeptical about the potential for trade negotiations to ease tensions. ANZ analysts noted that while the 90-day tariff pause offers temporary relief, uncertainty surrounding trade policies continues to dampen investment outlooks.

Meanwhile, the currency market saw the Japanese yen strengthen against the US dollar, reflecting increased demand for safe-haven assets. The dollar weakened to 143.64 yen, down from around 146 yen a day earlier.

The ongoing trade dispute raises concerns about broader economic impacts. Analysts estimate that the tariffs could reduce US GDP by 1.1% and increase costs for American households by approximately $4,700 annually.

CNBC, the Washington Post, Bloomberg, and the Associated Press contributed to this report.