Yen diplomacy is shaping Japan trade response to Trump says William Pesek

On April 25th, William Pesek joined CNBC’s Squawk Box to discuss Japan’s evolving strategy in its trade negotiations with the Trump administration, focusing on the critical role of the yen.

Key Takeaways:

• Japan faces U.S. demands for a stronger yen, risking its export competitiveness. A yen appreciation of nearly 10% in 2025 has already put pressure on Japanese manufacturers, and further gains could significantly damage profits if included in a rushed trade agreement.

• Trump’s push for a ‘Plaza Accord 2.0’ has Tokyo on edge. Japanese officials are wary of any deal resembling the 1985 Plaza Accord, which forced yen appreciation and ultimately contributed to Japan’s asset bubble collapsing faster than anticipated.

  
  

• The Bank of Japan is under pressure from both Washington and Tokyo. While Japanese politicians want a gradual path to currency stability, the BOJ is now also navigating overt pressure from U.S. officials who want the yen to rise more quickly.

  
  

• With national elections approaching, Japan is in no rush to finalize a trade deal. Prime Minister Ishiba has little incentive to move quickly, especially with Trump’s erratic trade record and Ishiba’s own low approval ratings.

  
  

• The Trump administration is pushing for a weaker dollar even as it hikes tariffs. This contradicts traditional U.S. policy and increases volatility in currency markets, making Tokyo cautious about any agreement that would commit the nation to a rising yen.

  
  

Who is William Pesek?

Mr. Pesek is an award-winning journalist based in Tokyo, known for his expertise in economics, politics, and business. He has contributed to a wide range of prominent publications, including Nikkei Asia, Politico, Reuters, Australian Financial Review, South China Morning Post, Forbes, Asia Times, Barron's, Quartz, Straits Times, and Chosun Biz.

Previously, he served as the executive editor for Barron's Asia and was an Asia columnist for Bloomberg.