Asian Stocks Fall Amid Market Turmoil Following US Tariff Impact

Asian stock markets dropped on Tuesday, mirroring losses in US equities, as President Donald Trump's decision to impose tariffs on key trading partners heightened fears of a trade war impacting global economic growth.

Markets in Tokyo and Sydney saw declines, while futures indicated a lower opening for Hong Kong’s equity benchmarks. The S&P 500 slid by nearly 2% following Trump's statement that Mexico and Canada would not receive exemptions from tariffs set to take effect Tuesday. Additionally, he signed an order increasing tariffs on China to 20%, causing the Canadian dollar and Mexican peso to weaken. Meanwhile, bond markets strengthened amid concerns that escalating trade tensions could slow global growth.

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Investor sentiment has become increasingly cautious due to geopolitical uncertainties and the potential for retaliatory tariffs exacerbating the ongoing trade conflict. On Monday, the Communist Party-affiliated Global Times reported that China was considering countermeasures targeting US agricultural and food imports in response to Trump’s latest tariff move.

"Market volatility is rising, and traders must remain dynamic and prepared for sudden developments," noted Chris Weston, head of research at Pepperstone Group Ltd., in a report.

Major US stock indices reflected the turmoil: the S&P 500 dropped 1.8%, the Nasdaq 100 lost 2.2%, and the Dow Jones Industrial Average declined 1.5%. The Magnificent Seven tech stocks collectively fell by 3.1%, while a UBS index tracking US companies affected by tariffs slipped 2.9%.

In bond markets, the yield on 10-year US Treasuries declined five basis points to 4.16% on Monday. The Bloomberg Dollar Spot Index remained stable, while Bitcoin saw a modest uptick after plunging over 9% the previous day.

The new tariffs coincide with China’s annual National People’s Congress, where President Xi Jinping and top policymakers, including ministry and provincial leaders, are set to meet starting Wednesday. Authorities are expected to raise China’s budget deficit target to its highest level in more than three decades, injecting trillions of yuan to counteract economic challenges such as deflation, a property crisis, and trade tensions with the US.

Emerging Asian currencies are under renewed pressure following the announcement of tariffs on China. The Thai baht and South Korean won each declined approximately 2% over the past week.

Additionally, Trump declared on Monday that tariffs would be imposed on "external" agricultural goods beginning April 2, though he did not specify which products would be affected or whether exceptions would be made. This announcement drove up the price of Chinese soymeal—a key component in food and animal feed—by 2.6%, marking its highest daily gain in over three weeks. Disruptions in US soybean shipments could further tighten global supply.

Meanwhile, Taiwan Semiconductor Manufacturing Co. (TSMC), the leading AI chip producer, announced plans to invest an extra $100 billion in US manufacturing facilities. The move aligns with Trump’s push to bolster domestic production.

In economic data, Monday’s manufacturing figures added to a series of disappointing US reports in recent weeks, reflecting weaker housing data, an increase in unemployment claims, and declining personal spending. The cryptocurrency market, which had recently surged, pulled back after Trump reiterated his calls for a digital asset stockpile.

In commodities, oil prices dropped after OPEC+ confirmed it would proceed with plans to resume suspended production.