The Nikkei 225 fell 0.3% to around 35,520, while the broader Topix Index dropped 0.9% to 2,637 on Wednesday, extending this week's selloff as investors geared up for the implementation of US President Donald Trump's reciprocal tariffs. Trump is also set to impose levies on car imports, affecting a key export industry in Japan. Data earlier this week showed that business sentiment in Japan weakened for the first quarter amid mounting concerns over the potential effects of US tariffs on Japan's export-driven economy. Investors now await household spending data on Friday for further economic insights. Among notable decliners were Mitsubishi Heavy (-1.8%), Mitsubishi UFJ (-2.5%), SoftBank Group (-2.3%), Toyota Motor (-1.1%), and IHI Corp (-1.2%).

Bank of Japan (BoJ) Governor Kazuo Ueda cautioned that new U.S. tariffs could have a substantial impact on global trade and economic growth.
Addressing Japan's parliament, Ueda underscored the uncertainty surrounding the potential effects of reciprocal tariffs on trade flows, business sentiment, and inflation. The newly imposed levies, which take effect on April 3, include a 25% duty on auto imports. These come in addition to existing U.S. tariffs on aluminum and steel, as well as higher duties on all Chinese imports. Ueda plans to raise these concerns at the upcoming G20 meeting, where U.S. trade policies and their repercussions will be a central discussion point. Analysts suggest the economic fallout could influence the BoJ's decision on interest rates, with a hike anticipated in Q3 of 2025, likely in July.

Source: Trading economi