The Nikkei 225 Index dropped 0.5% to around 39,439, while the broader Topix Index fell 0.1% to 2,816 during Thursday morning trading, as traders remained cautious after US President Trump signaled his intention to impose a 25% tariff on Japan. The index hit its lowest level in over three weeks, after being flat in the previous session. Caution was also built ahead of Japan’s upcoming Upper House election on July 20. The latest trade data further pressured sentiment, as the trade surplus narrowed in June compared to the same month last year. Exports unexpectedly fell, while imports rose more than anticipated. Limiting the decline was an upbeat session on Wall Street overnight, after President Trump denied plans to fire Fed Chair Jerome Powell. Energy minerals, non-energy minerals, and tech stocks were the main drags on the index. Among the biggest laggards were Toray Industries (-3.4%), Tokyo Electron (-3.1%), Minebea Mitsumi (-2.6%), and Nissan Motor (-2.5%).