Japan’s chief tariff negotiator, Akazawa, recently met with US officials for talks but didn’t achieve much progress. He spent three hours discussing issues with US Commerce Secretary Lutnick and had a 30-minute meeting with Treasury Secretary Bessent. The talks aimed to strengthen the benefits for both Japan and the US under their existing agreements. Japan pushed the US to confirm its position on reciprocal tariffs and proposed changes to the relevant executive order.

Ongoing Communication Between Japan And The US

Both sides emphasized the need for continued communication. However, the discussions did not yield significant advancements in trade tariff issues, leaving future negotiations uncertain. These latest trade talks have not resulted in any meaningful outcomes, maintaining a sense of uncertainty. This lack of a clear path suggests that the current influences on markets, especially the USD/JPY currency pair, will likely continue. Traders should not expect major shifts after this non-event. For those trading currencies, the USD/JPY pair is essential to monitor. This week, it has been around the 158 mark, largely due to the differing policies of the US Federal Reserve and the Bank of Japan. Trading options for volatility seems wise, as one headline could disrupt the current stability. This ongoing stalemate presents challenges for Japanese stocks, particularly for large exporters concerned about trade friction. The Nikkei Volatility Index is elevated at around 18.5, above its annual average, indicating investor anxiety. Now may be a good time to review protective put positions on the Nikkei 225 index to guard against potential losses.

Growing Trade Imbalance With The United States

Looking at the bigger picture, these discussions take place against a backdrop of a widening trade imbalance. In the first half of 2025, Japan’s trade surplus with the US reached nearly $75 billion, catching political attention in Washington. Similar circumstances in the late 2010s led to unexpected tariff announcements, reminding us history can repeat itself. In summary, the main takeaway from these talks is to remain cautious and avoid making large new bets. The emphasis on “continued close communication” suggests a stalemate, so our current strategies should remain in place. The market is waiting for a real trigger, and this wasn’t it. Create your live VT Markets account and start trading now.

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