Japan’s trade negotiator is discussing tariff issues with the US to seek a mutual agreement.
by VT Markets
/
Jul 22, 2025
Japan’s trade negotiator, Ryosei Akazawa, had a meeting with the US Commerce Secretary that lasted over two hours in Washington. The goal was to find a deal that would help both countries.
Even though the discussions were long, there is still very little information about what was decided. This indicates that the two parties are far from agreeing on tariff matters.
Prolonged Uncertainty
The slow progress signals ongoing uncertainty. The deadlock between the negotiator and the US Commerce Secretary puts pressure on the Japanese yen. It’s wise to prepare for possible fluctuations in the USD/JPY currency pair, which has already experienced over 5% changes in the past three months.
This situation calls for hedging strategies for anyone involved with Japanese exports, such as auto manufacturers. Although a weak yen has helped, the ongoing tariff fears could erase any gains quickly. With the U.S. being Japan’s biggest export market—where goods exports reached over $150 billion last year—the stakes are very high for the Nikkei 225.
Given the unclear path ahead, we think the best move is to trade on the uncertainty itself. We are considering buying options straddles on the USD/JPY, which benefit from big price shifts in either direction. In the past, similar trade disputes, especially from 2018 to 2020, led to sudden and unpredictable changes instead of a steady trend.
Policy Implications for the Bank of Japan
The discussions mentioned by Mr. Akazawa, which ended without an agreement, add another challenge for the Bank of Japan. The bank is already facing a yen that is at its lowest value in decades and has spent about 9 trillion yen on currency interventions this year. This lack of progress complicates their policies, making future actions from the central bank another factor that could affect the market.
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by VT Markets
Jul 22, 2025
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