Japan's Nikkei 225 stock index closed down 1023.42 points, or 3%, at 33,585.58 on Friday, after falling as much as 1900 points earlier in the day and breaching the 33,000 mark. This significant drop was driven by heightened concerns over the escalating U.S.-China trade war and a strengthening yen, which reached a half-year high against the dollar at 142 yen. The yen's appreciation to as low as 142.88 yen, its lowest level since September 30 of the previous year, was fueled by investors seeking safe-haven assets amid fears of economic slowdown due to U.S. tariffs. Concurrently, the euro surged to a three-year high against the dollar, reaching 1.1439. In response to the economic pressures from high tariffs and inflation, Japan's ruling coalition parties, including the Liberal Democratic Party (LDP) and Komeito, are considering various measures. Komeito leader Natsuo Saito has suggested the possibility of issuing deficit-covering bonds to fund cash handouts, while also considering tax cuts, including a reduction in consumption tax on food items. The opposition Constitutional Democratic Party of Japan (CDPJ) has also entered discussions on economic policies, with some members advocating for a temporary reduction of the consumption tax rate to zero for food items or a general reduction to 5% across all goods. However, former CDPJ leader Yukio Edano criticized these proposals as irresponsible populism aimed at the upcoming House of Councillors election. Prime Minister Fumio Kishida is set to instruct the compilation of an extra budget as early as next week to address the economic challenges posed by the U.S. tariffs and inflation.