Mon, 03 Feb 2025

Asian markets tumble as Trump's tariff war escalates

Investors are bracing for a potential trade war that could hit the earnings of major companies.
Asian markets suffered losses on Monday morning after US President Donald Trump implemented tariffs on Canada, Mexico, and China. Investors are concerned that the move could lead to a trade war, which could negatively impact major companies' earnings and global growth. The tariffs, which target the US's three largest trading partners, have sparked retaliation from Canada and Mexico, who promise to impose their own retaliatory measures. China has also vowed to challenge Trump's decision at the World Trade Organization and take "corresponding countermeasures". Markets in Asia were affected by the news, with Hong Kong's Hang Seng Index falling 0.7%, Japan's Nikkei 225 declining 2.8%, South Korea's Kospi plummeting 3%, and Australia's ASX 200 dropping 1.9%. The US dollar gained strength against the yuan, while the Canadian dollar hit its lowest level since 2003. Analysts warn that a prolonged trade spat between the world's two largest economies will lead investors to reduce risk exposure, while also sparking concerns about which countries may be next on Trump's tariff list. Chief investment strategist at Saxo, Charu Chanana, warned that tariffs pose significant risks in the long term, as they could incentivize other countries to reduce their reliance on the US and weaken the dollar's global role.
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