Trump Tariffs Roil Markets, Nikkei Closes at 38,520 After 1,052-Point Drop

The announcement of sweeping tariffs by U.S. President Donald Trump has caused significant market disruptions globally. The U.S. dollar surged, nearing parity with the euro, while reaching record highs against the Canadian dollar and a three-year high against the Mexican peso. In response to the tariffs, Japan's Nikkei 225 fell sharply, closing at 38,520, down 1,052 points, marking its largest decline in three months. The tariffs, set to begin on February 4, include a 25% levy on imports from Canada and Mexico and a 10% tariff on Chinese goods, raising concerns about global economic stability. Exporting companies with investments in these regions, particularly in the automotive and electronics sectors, faced steep declines. For instance, Toyota and Mazda, which have manufacturing operations in Mexico, saw their stocks drop significantly, though Mazda's stock partially recovered by 4.9% on Tuesday. The tariffs have also influenced the Bank of Japan's policy outlook, with speculation of a potential rate hike, further strengthening the yen. Toyota revised its profit forecast upwards, providing some reassurance to investors, but the market remains volatile, with investors cautious about the long-term implications of these protectionist measures.