Nikkei Slumps Amid Uncertainties Triggered By Donald Trump's Tariffs

The Japanese markets appear to be in a state of decline after US President Donald Trump decided to go ahead with his policy of imposing tariffs on Canada & Mexico.

As a result of this development, the US markets tanked in the intraday trade on Monday, the marquee indices, including Dow Jones, S&P 500 and Nasdaq Composite, all saw millions washed away from the equity markets.

A ripple effect of the same appears to have hit the Japanese markets as well.

Nikkei 225

Towards the end of the trading session in Tokyo, the Nikkei 225 index, which is one of the most consequential indices in Asia, slumped to 37,311.22 points.

This was a result of a cumulative decline of a mammoth 1.26 per cent or 474.25 points.

TOPIX

The state of the other major index, the TOPIX, was no different, as the index moved sluggishly to 2,710.14 points.

This came to pass after a cumulative decline of 0.71 per cent or 19.42 points.

The Japanese Economy

This comes a time, when the Japanese economy, which has suffered from deflationary cycle for decades, has looked to reverse the trend. The economy of the Land of the Rising Sun has seen apparent 'normalisation'.

Here, this meant the country had positive interest rates for the first time, after years of zero interest rates. The country has also seen a healthy rise in inflation, and thereby wages.

However, this new tranche of uncertainty emerging from the Oval Office does not aid the cause of the country.

In addition to the tariffs on Canada, Mexico, and China, Trump has also threatened tariffs on other nations that have a trade surplus with the US.

Apart from that, the administration also imposed additional tariffs on steel and aluminium imports to the United States.

Here, Japan is a major producer of steel, with the Japanese company Nippon Steel holding a market capitalization of USD 23.52 billion. Interestingly, the company was also talks to take over US Steel, which was later rejected by the Biden Administartion.