ASIAN markets tumbled on Tuesday (Mar 4) after US President Donald Trump heaped tariffs on Chinese imports and warned levies on Mexico and Canada could not be averted.
Japan’s Nikkei and Hong Kong’s Hang Seng saw the biggest drop, tumbling more than 2 per cent and 1.5 per cent respectively.
It comes after the White House said Trump had signed on Monday an executive order to increase a previously imposed 10 per cent tariff on China, to 20 per cent.
The US president also stressed that Canada and Mexico would not avoid being hit with 25 per cent levies, causing US stocks to fall on Monday.
Canada responded on Tuesday by putting 25 per cent tariffs against US$155 billion worth of American goods.
Beijing also warned on Tuesday that it would take countermeasures against new US tariffs on Chinese imports.
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“China is strongly dissatisfied with this and firmly opposes it, and will take countermeasures to resolutely safeguard its own rights and interests,” a commerce ministry spokesperson said.
Fears the retaliatory tariffs could escalate into a full-blown trade war, drove markets down across Asia on Tuesday.
Japanese automakers with Mexican factories in their supply chain suffered, with Nissan (-2.11 per cent), Toyota (-2.25 per cent), or Honda (-2.12 per cent) among the major losers.
Exchanges across Asia mirrored the downward trajectory, with Thailand, Australia, New Zealand and Taiwan dropping around 1 per cent.
South Korea, the Philippines and Malaysia also fell.
“The spectre of a full-blown trade war is once again looming, threatening to choke global economic growth just as investors were starting to regain confidence,” said Stephen Innes, SPI Asset Management.
Investors are hoping China will announce a huge stimulus package at its key parliamentary meeting on Wednesday, the National People’s Congress, to stimulate the economy.
“In the upcoming National People’s Congress, Chinese policymakers could provide more pro-growth measures including announcing a larger budget deficit target and maintaining a five per cent growth target for this year,” said Lloyd Chan, from MUFG bank.
Trump expressed outrage on Monday over the weakening of certain currencies and accused Beijing and Tokyo of using it as a trade strategy – a claim fiercely refuted by the Japanese government.
The oil market also saw sharp declines with US WTI crude oil falling 0.54 per cent to US$68 per barrel, and Brent crude from the North Sea dropping 0.77 per cent to US$71.06 per barrel at around 0200 GMT.
Bitcoin’s price plunged nearly 10 per cent on Monday as concerns of an escalating trade war pushed investors to seek safer investments.
Bitcoin and similar digital assets had surged over the weekend after Trump suggested creating a national cryptocurrency reserve.
“Everything is getting sold,” Forexlive manager Adam Button said, adding: “There’s a de-risking that’s unfolding” among crypto investors. AFP
