Buying the yen to protect against a trade war is ‘pretty peculiar,’ wealth manager says;

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With fewer imports to the U.S., the Japanese economy could be hit and the currency could depreciate. More importantly, Japan could suffer from a deterioration in the trade ties between the U.S. and China, given its proximity to the latter. According to Tobias Harris, the vice president of advisory firm Teneo, the economic impact of the metal tariffs should be small on Japan, but they could signal something much more important. "The direct economic impact on Japanese producers may be limited — only 2 percent of Japan's steel exports go to the U.S. —

Why buying the yen as protection from a trade war is 'pretty peculiar' from CNBC.

 but Tokyo's failure to convince Washington to spare it from the new measures could be a sign of a more contentious turn in the bilateral relationship," he said. "After a year of broad discussions in the U.S.-Japan Bilateral Economic Dialogue … The U.S. administration appears to be increasingly determined to press Japan for concessions to open its market and reduce its bilateral trade surplus with the U.S.," Harris added in a note Friday. Data from the Japanese government showed last month that the country's trade surplus with the United States narrowed in January, dropped 12.3 percent from a year ago to 349.57 billion Japanese yen ($3.32 billion). Japan has announced that it would look to be exempted from the metal tariffs, though they came into effect on Friday.

ImGE