U.S. President Donald Trump threatened Japan with tariffs of up to 35% as he ramped up tensions for a third straight day, fueling fears of a worst-case scenario among market

The US president’s liberation day tariffs are due to return from July 9, with warnings they could do as much inflation damage as the pandemic.

Japanese carmakers have largely absorbed the cost of US President Donald Trump’s tariffs on auto imports, a move that may undermine the Asian nation’s negotiating power ahead of a July 9 deadline that will see duties rocket even higher.