Summary
US trade policy will reach a critical juncture in April. On 2 April, the Trump administration is expected to implement a 25% tariff on automobiles and announce details of its reciprocal tariff framework. The auto tariff, in particular, could strike at the heart of Japan's industrial base. The measures could trigger renewed yen selling if they prove to be harsher than markets had anticipated. Tariffs could also complicate the BOJ's efforts to normalize monetary policy. The central bank has said it will update its forecasts at the next policy meeting based on how tariff policy unfolds. That meeting is likely to include a decision on whether to proceed with another rate hike, but the BOJ may not have sufficient time to lay the groundwork.
