Japan’s Stocks Slide as Global Growth Outlook Darkens on Tariffs

Japanese stocks fall as global investors dumped riskier assets on concern Donald Trump’s tariffs will slow the world economy. Bank shares slid most on the view Bank of Japan won’t raise interest rates as much if US levies batter the economy, while a stronger yen hurt exporting companies.

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Bloomberg News

Aya Wagatsuma and Toshiro Hasegawa

Published Apr 03, 2025  •  1 minute read

An electronic stock board shows declining share prices displayed outside a securities firm in Tokyo, Japan, on Thursday, April 3, 2025. Stocks plunged and haven assets rallied as investors rushed for safety after US President Donald Trump unveiled reciprocal tariffs that were more aggressive than expected, sparking concerns over inflation and growth. Photo by Kiyoshi Ota /Bloomberg

(Bloomberg) — Japanese stocks fall as global investors dumped riskier assets on concern Donald Trump’s tariffs will slow the world economy. Bank shares slid most on the view Bank of Japan won’t raise interest rates as much if US levies batter the economy, while a stronger yen hurt exporting companies. 

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The Topix slid as much as 3.7% to 2473.03 in morning trade in Tokyo, while the blue-chip Nikkei 225 declined as much as 2.8% to 33770.29. The yen jumped 2.7% versus the dollar overnight to trade at the strongest level since October. 

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Banks extended their drop from Thursday to slide more than 10% as Trump’s sweeping tariffs cast doubts over the BOJ’s policy normalization course and as Japan’s 10-year yield slumps for a second day amid haven demand. Exporters of electronics and autos were some of the other sectors that dragged down the Topix. 

“Canada and Europe are showing retaliatory tariff measures, so there is a possibility that this could lead to a further trade war, which is causing a sell-off,” said Takuma Ikemoto, a market analyst at Tokai Tokyo Intelligence Laboratory. “If a tariff war breaks out between individual countries, there is a possibility that tariffs will be applied to countries other than the United States that Japan exports to,” leading to an economic downturn for the country. 

In the US, the S&P 500 posted its worst single-day drop since 2020, wiping out about $2 trillion. The dollar also sank, while oil joined a sell off in commodities.

“With no indication of changes to Trump’s tariffs, the moves today in the stock market are likely to factor in concerns about the potential prolonged impact on the economy,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

Japan’s Recession Risk From Trump Tariffs Clouds BOJ Policy Path

Trump slapped a 24% tariff on Japan’s exports under a plan to impose levies on trading partners worldwide. The broader Topix fell 10% from its March peak, and is poised to enter a technical correction.

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