USD/JPY: Yen Plummets Against Dollar as Trump Slaps Japan with 25% Tariff

US dollar once again swayed forex markets like a punching bag after Trump sent out letters to heads of countries. Japan’s verdict? Failure to reach a deal and a 25% tariff rate effective August 1.

🔥 Yen Craters on 25% Tariff

• The USDJPY pair ripped higher Monday and extended its rally into early Tuesday, blasting through the ¥146.00 mark to hit a fresh session high of ¥146.50 — up 1.5% in less than two days.
• The move came after President Trump on Monday confirmed Japan failed to secure a trade deal before the deadline, triggering a snapback to a 25% tariff rate starting August 1.
• Forex bros were quick to slam the yen, betting that Japan’s export-heavy economy will take a hit just as it faces fragile growth and stubborn inflation.

🏷️ Return of the Tariffs

• The tariff slap isn’t personal — Trump posted screenshots of identical “form letters” sent to at least 14 nations, including South Korea, Malaysia, Kazakhstan, South Africa, Laos, and Myanmar.
• The letters dictate blanket tariffs of up to 40% on imports from these countries, with a line that the US will “perhaps” reconsider the rates “depending on our relationship with your Country.”
• Under Trump’s original “Liberation Day” tariffs on April 2, Japan was looking at a 24% rate, but that was paused to 10% for 90 days. Now, the reprieve is nearing its end — unless the White House walks it back yet again.

🌀 FX Just Got Volatile

• With just three weeks until the August 1 switch flips the tariffs back to full force, forex markets are bracing for more swings in the yen.
• Japanese officials were reportedly blindsided by Trump’s Monday posts, with little hope of brokering a last-minute deal as the US president, in his usual style, updated everyone on social media.
• What happens now? Will Japan seek to retaliate — or will the yen stay pinned under pressure as the trade hit ricochets through its massive automotive and tech export sectors?