Asian stock markets were under heavy selling pressure in the early session on Monday after US President Donald Trump announced new tariffs on several countries. The U.S. government announced a 25 percent tariff on imports from Canada and Mexico and a 10 percent tariff on Chinese goods, effective Tuesday. The announcement sparked panic among investors, leading to a sharp fall in major Asian stock indices.
Major Asian indices, including Japan's Nikkei 225 index, fell more than 2.27 per cent, while Hong Kong's Hang Seng index fell 2.07 per cent. Taiwan's weighted index saw the biggest decline, falling by over 3.74 per cent and South Korea's KOSPI index by 2.87 per cent at the time of filing this report.
Indian stock futures are also down due to the tariff impact, with Nifty futures down 0.83 percent at the time of filing this report. Fears of a possible trade war have made investors cautious, leading to a massive sell-off in the stock markets. Investors worry that tariffs could slow global trade, affecting businesses and consumers worldwide. Banking and market expert Ajay Bagga pointed out that "a disastrous cycle has begun for global economies and markets are starting to go down in anticipation. Fears of Trump 2.0 are at the center of the plate today and the haven purchases of gold, Swiss francs, yen will be the only place to hide in the risk induced by these tariff wars. "
He further added that "Trump tariffs have become a grim reality for markets, geopolitics and economies globally. The high levels of global markets, the broad and high nature of the tariffs, and statements from Trump politics that once again call for Canada to become the 51st state of the USA are all fuelling risk sentiments everywhere. "
Analysts also noted that the second-order effects of tariffs after an initial stock drop are competitive currency devaluation by exporters, led by China. The third-order impact will be the rapid dumping of goods produced by the Chinese economy, already suffering from excess capacity. Trump 2.0 fears are at the center for the markets on Monday and experts highlighted that safe-haven purchases of gold, Swiss francs and the yen will be the only place to hide in the risky storms induced by these tariff wars.