Asian markets plunge as trade war escalates
Tariff tensions send asian markets into sharp decline
Asian markets plummeted on Monday, deepening a global stock market rout triggered by the escalating trade war between the United States and China.
U.S. President Donald Trump’s new tariffs have led to sharp declines in stock indices across Asia, and the effects of China’s retaliatory measures have rippled through global financial markets, reports CNN.
Market Sell-Off in Asia
Japan’s benchmark Nikkei 225 fell more than 8% shortly after opening, while the broader Topix index dropped over 6.5% after recovering from even steeper losses. In mainland China, markets reopened after a public holiday to find the Shanghai Composite Index trading 6.7% lower, with the CSI300 index falling by 7.5%.
Hong Kong’s Hang Seng index opened more than 9% lower, and South Korea’s Kospi tumbled by over 4.8%, prompting a brief halt in trading. The downturn in Asian markets follows Wall Street’s worst two-day stretch in five years, where the S&P 500 and Nasdaq lost nearly 14% and 19% year-to-date, respectively. The sell-off was triggered after China imposed a 34% tariff on all U.S. goods in response to Trump’s latest round of tariffs.
China’s Forceful Retaliation and Future Trade War Risks
China’s response to the new tariffs has been swift and aggressive. The Chinese Communist Party’s official mouthpiece, People’s Daily, published a commentary on Monday asserting that China has the "strong capacity to withstand the pressure" of U.S. tariffs. The commentary emphasized China’s ability to counter the US’s actions, given years of experience in trade disputes.
Lazard’s chief market strategist Ronald Temple warned of severe economic damage as a result of these tariffs. He forecast that broad-based retaliation from other countries would follow, further intensifying the trade conflict. The tariffs have already affected major Asian economies, including Taiwan, where stocks like TSMC and Foxconn plunged, triggering circuit breakers.
U.S.-China Economic Deficit Concerns
President Trump defended his tariff policy, stating that the U.S. had been treated unfairly by other countries, particularly China. He reiterated his stance on addressing the U.S. trade deficit, which reached $295.4 billion with China last year. Trump also signaled his willingness to negotiate with China and the European Union to solve trade imbalances.
Japan, South Korea, and Taiwan are all exploring ways to counteract the tariffs, with leaders in these nations expressing concerns over the future of trade relations with the US. Japanese Prime Minister Shigeru Ishiba plans to appeal to Trump to reduce tariffs, while Taiwan's President Lai Ching-te has pledged to purchase more U.S. goods to ease trade tensions.
Economists have revised down growth forecasts for Asia, warning that countries like South Korea and Singapore may struggle to negotiate with the U.S. over tariff reductions. The trade war’s global impact continues to grow, as investors fear prolonged instability and escalating tensions between the world’s two largest economies.
The U.S.-China trade war has sent shockwaves through global markets, with significant losses in Asia and growing concerns about the broader economic implications of escalating tariffs.
Additionally, Donald Trump on Sunday defended his decision to impose sweeping tariffs on nearly all U.S. trading partners, despite a sharp sell-off in financial markets and concerns from business leaders.
