Tariff Tensions Trigger Supply Shocks and Currency Slides

Overview

Geopolitical and trade tensions continue to reshape global markets this week. China, seeking to ease fallout from the Boeing jet dispute, signaled openness to cooperation with US firms even as tariff battles intensify. Meanwhile, Japan is pushing for a stronger alliance with the US to counter growing regional risks tied to Trump’s aggressive trade policies. In the US, a steep 60% plunge in Chinese imports is setting the stage for a major supply shock, with fears of inflation and recession mounting. President Trump, showing no signs of backing down, demands substantial concessions from China before easing tariffs. In currency markets, USDJPY remains under pressure, with bearish technical signals suggesting further downside risk.

China Signals Cooperation After Boeing Fallout

China signaled it is willing to support normal cooperation with US companies after tensions flared over Boeing jet deliveries. Chinese airlines recently halted new Boeing orders due to retaliatory tariffs in the ongoing U.S.-China trade dispute. About 50 Boeing jets originally destined for China are now in question, with Air India already accepting dozens. China urged the US to create a stable environment for trade and investment, as the disruptions impact both sides’ aviation sectors.

Stronger US-Japan Alliance Urged Amid Tariff Tensions

Japan’s ruling party policy chief called for stronger U.S.-Japan defense ties and suggested joint production of defense equipment. With Tokyo preparing for new trade talks, officials stress the need to quickly resolve tariff tensions to safeguard regional security amid rising threats from Beijing. Japan is warning that US President Donald Trump’s tariffs could push Asian countries closer to China, risking regional instability.

Cargo Crash: US Imports from China Plunge 60%

US President Donald Trump’s 145% tariffs on Chinese goods have caused a sharp 60% drop in cargo shipments from China, setting the stage for a major supply shock in the US economy. Retailers like Walmart and Target warn of looming shortages, higher prices, and potential layoffs across trucking, logistics, and retail sectors. Even if trade tensions ease, restarting shipments risks overwhelming ports and supply chains. Economists fear the tariffs could trigger inflation, a recession, and a credit crunch if disruptions persist into the second half of 2025.

Trump Turns Up Tariff Pressure, Demands Substantial Concessions from China

President Donald Trump signaled that another delay in his new “reciprocal” tariffs is unlikely, increasing pressure on trading partners to make concessions. Trump said he won’t ease tariffs on China without “something substantial” in return and downplayed recent market volatility as part of a necessary adjustment. While he expects to finalize several trade deals within weeks, talks with China remain uncertain, with Trump indicating he’s waiting for Beijing to take the next step.

Technical Analysis: USDJPY Under Pressure

After peaking at 158.866 on January 10, USDJPY has maintained a clear downward trend, reinforced by a series of bearish technical signals. Multiple reversal patterns — including bearish candlestick formations, a failure swing, and the development of a “Death Cross” — have added to the pair’s negative outlook.

Currently, USDJPY remains positioned below the 50-period Exponential Moving Average (EMA), with momentum indicators continuing to validate the bearish scenario. The Momentum Oscillator is entrenched below the 100 threshold, and the Relative Strength Index (RSI) holds under the neutral 50 level, indicating persistent downside pressure.

From a technical standpoint, any recovery attempts would need to overcome initial resistance at 144.022, with subsequent barriers at 148.269 and 151.199. Conversely, if selling pressure persists, the next key support levels to monitor are 139.877, 137.902, and 127.642.

Conclusion

The global landscape remains volatile as trade tensions, geopolitical shifts, and market pressures converge. China’s call for cooperation, Japan’s push for stronger alliances, and Trump’s hardline tariff stance are reshaping economic and strategic dynamics. Meanwhile, sharp declines in U.S.-China trade flows raise fresh concerns about supply chain stability, inflation, and potential recession risks. In financial markets, technical weakness in USDJPY reflects broader uncertainty. As developments unfold, investors will remain highly sensitive to policy signals, trade negotiations, and shifts in global sentiment.