US Treasury Secretary Scott Bessent stated he has not yet received a trade offer from Japan but expects prioritisation in negotiations due to Japan’s proactive stance. He noted Japan’s non-tariff trade barriers are considerably high and expressed optimism for future discussions.
The USD/JPY pair was trading 0.02% lower at 147.80. Tariffs serve as customs duties on imports, intended to assist local producers by providing a price advantage over imported goods.
Under President Donald Trump’s tariff plan, Mexico, China, and Canada represented 42% of US imports in 2024, with Mexico being the top exporter at $466.6 billion.
Japan’s Trade Relations and Non-Tariff Barriers
Bessent’s remarks signal a guarded sense of anticipation, not necessarily due to any major breakthrough, but rather because of Japan’s deliberate outreach. From what we can gather, there seems to be an expectation that Japan will be addressed sooner than others, especially considering its consistent engagement and the weight of ongoing trade barriers that go beyond tariffs—things like regulatory or procedural hurdles that can impact the flow of goods. These non-tariff methods, though less visible, often carry more influence over trade performance than direct duties.
Looking at the USD/JPY pair easing slightly to 147.80, traders should take note of how subtle currency movements are increasingly tied to diplomatic sentiments. A 0.02% decline might appear negligible, but it suggests that market participants are pricing in a potential adjustment in bilateral relations or future trade positioning rather than reacting to immediate economic shifts. For context, minor changes like these become more meaningful when they occur alongside policy commentary or perceived negotiation momentum.
Tariffs themselves, while often discussed in broad terms, are straightforward—they are taxes on imported goods, intended to level the field for domestic suppliers. In application, however, they can introduce a host of distortions depending on how aligned they are with internal production capabilities and consumer demand. Traders tracking macroeconomic trends need to keep these distinctions in mind, especially as fiscal tools like tariffs are sometimes wielded more for leverage than for immediate economic impact.
Impacts of Trade Policies on North American Dynamics
On another front, the figures from 2024 trade flows point to long-standing dynamics that are unlikely to soften quickly. Mexico’s top spot at over $466 billion in exports to the US means any future trade adjustment involving Washington will inevitably have ripple effects across North America. Meanwhile, China’s and Canada’s positions reinforce the point—policy decisions touching these large partners are bound to reflect in institutional flows and derivative pricing.
For those navigating forward contracts or options linked to FX or trade-sensitive equities, the current environment calls for more than technical signals. It’s the policy trajectory, grounded in hard numbers and exact statements like Bessent’s, that provides the sharper lens. Where talks are likely or likely delayed will make itself felt in gradual shifts—spread movement, volume rotation, implied volatility cliffs.
We continue to monitor how these trade discussions, particularly the mention of prioritising Japan, may influence short-term expectations. This could mean increased attention to currencies tightly linked to East Asian trade and heightened sensitivity to official language from ministries and central banks. The edges of these discussions, where nothing is finalised but much is hinted at, is where pricing opportunity tends to begin.
