Japan's Nikkei 225 Stock Average has entered a bear market due to concerns about an escalating trade war. Japanese Prime Minister Shigeru Ishiba is expected to discuss tariff exemptions with US President Donald Trump. The major stock index dropped 7.8% on Monday, bringing its total decline from its peak in December to 23%. The Topix index also declined, especially affected by electronics manufacturers and banks as Japan's economic forecast darkened.

This marks the first time the Nikkei has been in a bear market since August, following an unexpected rate increase by the Bank of Japan which led to a market downturn. Ishiba is anticipated to request tariff exemptions during his call with Trump and may also propose an additional budget to counter the tariff impact and ongoing inflation. Ishiba emphasized Japan's fair trade practices in response to concerns raised during parliamentary questioning.

The Nikkei has recorded the most significant drop among major Asian indexes this month, impacted by the strength of the yen which could negatively affect exporters. There are rising worries about a global recession due to retaliatory tariffs between China and the US. The uncertainty surrounding the global trade landscape is also causing traders to rethink investments in anticipation of Bank of Japan's interest rate hikes, intensifying the pressure on Ishiba to manage inflation issues affecting consumption and economic growth.