Asian Stock Markets Tumble Following US Tariff Announcements and Global Trade Tensions
Asian stock markets experienced a widespread decline on Tuesday, mirroring the significant drop in US markets on Monday. The global stock market downturn was largely triggered by former President Donald Trump’s announcement of a 25% tariff on imports from Canada, Mexico, and China, effective March 4, 2025. China swiftly responded with countermeasures, escalating trade tensions and further unsettling investors.
US Tariffs and Immediate Market Impact
Trump revealed that the 25% tariffs on Canada and Mexico would take effect immediately, with reciprocal tariffs set to begin on April 2. He emphasized that no agreements had been reached, leaving no room for the North American countries to avoid the tariffs. Market participants had anticipated a last-minute deal to delay the tariffs, but the lack of resolution led to a sharp sell-off. The S&P 500 index fell by 1.76%, marking its largest daily percentage drop in over two and a half months.
In addition to the tariffs on Canada and Mexico, Trump also announced an increase in tariffs on Chinese imports, raising them to 20% from the previous 10%. The US administration justified the move as a response to China’s alleged inaction in curbing the flow of narcotics, particularly fentanyl, into the United States.
China’s Retaliatory Measures
China did not remain passive in the face of the US tariffs. The country quickly retaliated by increasing import costs by 10% to 15% on various US agricultural and food products. Additionally, China imposed export and investment restrictions on 25 American companies. These measures are set to take effect starting the week of March 10.
China criticized the US tariffs, stating that they violate World Trade Organization (WTO) rules and undermine global trade stability. The Chinese government vowed to take firm steps to protect its national interests against what it described as detrimental US trade policies.
Impact on Asian and US Markets
The ripple effects of the trade tensions were felt across global markets. Shares of Chinese companies listed on Wall Street plummeted on Monday, with Neo falling 8.6% and GD.com dropping nearly 4%. In Asia, major indexes opened lower and continued to decline throughout the day. As of 1:32 PM local time, Singapore’s STI was down 0.30% to 3,897, Japan’s Nikkei fell 1.40% to 37,293, South Korea’s KOSPI dropped 0.15% to 2,528, and Hong Kong’s Hang Seng weakened 0.10% to 22,900.
Ongoing Market Volatility
The uncertainty surrounding the impact of protectionist policies on global trade flows has heightened market volatility. Analysts predict that this turbulence will persist as investors assess the long-term implications of the escalating trade war. The five key tariff policies reiterated by Trump are seen as a major factor worsening market sentiment, with no immediate resolution in sight.