Trade tensions have risen. No doubt about it, but to consider this a trade war is premature. We should not pretend that this is the first time that the US adopted protectionist measures that ensnarled our military allies.
We have been to this dance before. Countries will respond with some symbolic retaliation on a small number of goods that make a little more than a rounding error in bilateral trade, take some measures to ensure that the defection of the US does not lead to an import surge, and appeal to the conflict resolution mechanism at the WTO.
Being in Hong Kong as this two-week business trip winds down, I had the privilege of visiting with Yvonne Man at Bloomberg and tried to lay out this less emotive read of developments. Here is a 90-second clip of talk.
In terms of the price action, the dollar was slipping through the JPY105 level in early Asian turnover. I suggest to Yvonne that a convincing break of it would target JPY100.