EUR/JPY climbs above 183.50 as EU counters Trump’s tariff threats
- EUR/JPY gains as the euro is supported by EU efforts to deter US tariffs on European allies.
- President Trump says tariffs will be imposed on eight European countries opposing his Greenland proposal.
- Japan’s Industrial Production fell 2.7% MoM in November, the steepest decline since January 2024.
EUR/JPY appreciates after three days of losses, trading around 183.60 during the Asian hours on Monday. The currency cross receives support as the Euro (EUR) receives support after European Union (EU) ambassadors agreed Sunday to step up efforts to dissuade US President Donald Trump from imposing tariffs on European allies, while preparing retaliation if duties proceed, diplomats said.
On Saturday, US President Donald Trump said that he would impose tariffs on eight European countries opposing his proposal to acquire Greenland. Trump stated that a 10% tariff would be levied on goods from EU members Denmark, Sweden, France, Germany, the Netherlands, and Finland, as well as Britain and Norway, effective February 1, until the US is permitted to purchase Greenland, per Bloomberg.
Japan’s Industrial Production fell 2.7% month-over-month (MoM) in November 2025, slightly worse than the 2.6% preliminary estimate, reversing October’s 1.5% gain and marking the sharpest decline since January 2024.
The upside in EUR/JPY cross may be capped as the Japanese Yen (JPY) gains support from expectations of Bank of Japan (BoJ) rate hikes and prospects of increased fiscal spending under Prime Minister Sanae Takaichi.
However, the Japanese central bank is widely expected to hold its policy rate at 0.75% this week, though markets are monitoring the possibility of a move in June. Last week, BoJ Governor Kazuo Ueda reiterated that the central bank remains prepared to raise rates if economic and price developments evolve in line with its outlook.
Japan’s Finance Minister Satsuki Katayama signaled the possibility of coordinated intervention with the United States to support the weak currency. On Friday, Katayama reiterated that all options remain on the table, including direct market intervention, to address the recent depreciation of the Japanese Yen.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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