U.S. President Donald Trump on Monday warned the leaders of Japan and China that they could no longer continue weakening their currencies, calling it unfair to the United States.
His remarks came as new 25% tariffs on imports from Mexico and Canada took effect, along with a doubling of duties on Chinese goods to 20%, further escalating global trade tensions.
Trump’s comments sent the Nikkei benchmark down nearly 2% on Tuesday, as they contributed to a rise in the yen, which briefly climbed to 148.60 per dollar. He criticized Japan, China, and other countries for devaluing their currencies, which he argued hurt U.S. manufacturers by making it difficult for them to compete.
Trump added that tariffs could help offset the disadvantage faced by U.S. manufacturers.
Japanese officials denied any intentional effort to weaken the yen. Finance Minister Katsunobu Kato emphasized that Japan’s currency policy was aligned with the G7 and the U.S. Kato also noted that Japan had engaged in two-way talks with U.S. Treasury Secretary Scott Bessent in late January.
Trump’s remarks echoed previous criticisms of Japan and China during his first term, when he accused them of deliberately devaluing their currencies. Between March 2018 and May 2020, the Chinese yuan depreciated by over 12% against the dollar amid a series of tariff increases between the U.S. and China.
China has since focused on stabilizing its currency, with the yuan appreciating slightly against the dollar on Tuesday.
The yen’s recent rebound is seen as a reflection of Japan’s strong economic fundamentals and the potential for a near-term interest rate hike by the Bank of Japan (BOJ). Japanese officials have been cautious about market volatility caused by Trump’s comments, as sharp fluctuations in the yen could hurt consumption and inflate import costs.
