Japan Inc. is caught in the crossfire of the trade war between the United States and China, as a resurgent yen threatens to sap profits and complicate the economic outlook.

Worsening trade friction between the world's two largest economies has reduced investor appetite for risk and boosted assets perceived to be safer bets, such as gold and the yen.

Japan's currency is now near its firmest level in eight months against the dollar, and exporters in the world's third-largest economy are preparing for pain.