How do U.S. tariffs affect Japanese yen performance?

The Japanese yen has long been considered a safe haven currency, typically strengthening during global uncertainties. However, the ongoing U.S. tariffs have placed significant pressure on the yen. As trade tensions between the U.S. and other nations escalate, especially with China, Japan's economy faces challenges. The tariffs lead to weaker trade flows, which negatively impact Japan's export-driven economy. Moreover, the strong U.S. dollar, supported by the Federal Reserve's tightening policies, makes it harder for the yen to appreciate. The increased demand for the U.S. dollar as a safe haven in light of global risks has resulted in investors pulling away from riskier assets, including the yen. Therefore, while the yen might still benefit from some global economic instability, it remains vulnerable due to the strength of the U.S. dollar and the economic challenges posed by the tariffs.

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Impact of U.S. Tariffs on Asian FX and the Australian Dollar in 2025