Trump's high tariffs cause Asian stock markets to collapse

Trump's high tariffs cause Asian stock markets to collapse

Stock markets in the Asia-Pacific region saw a drastic fall on Thursday after US President Donald Trump made a surprise move Customs duties imposed on trading partners worldwide. These measures hit many Asian countries particularly hard.

Economic impact of the new tariffs

The sweeping tariffs have raised duties on Chinese imports, the second-largest source of U.S. imports after Mexico, from 20% to 54%. Japan also faces a tariff of 24%, while South Korea will face a 25% tariff - both countries are important trading partners and allies of the USA. Taiwan, a major electronics exporter and manufacturer, faces a 32% tariff.

Reactions to market developments

News of the tariffs left U.S. stock markets buoyed in after-hours trading on Wednesday break in and caused Asian markets to fall sharply shortly after opening on Thursday. Japan's Nikkei 225 index fell over 4% to close down 2.8%. South Korea's Kospi index fell 2.7% and closed less than 1% lower. Hong Kong's major Hang Seng index fell 2.4%. In Australia, which faces a 10% tariff, the ASX 200 index fell 1.8%. Markets in Taiwan were closed on Thursday.

Sectors particularly affected

Shares of major technology and auto companies in the region were among the hardest hit. Japanese tech giant Sony fell more than 5.4% in the morning. Automakers Toyota and Honda reported declines of nearly 5% and over 4%. South Korean technology group Samsung and automotive giant Hyundai also each posted declines of over 3% after opening.

Gold as a safe haven

Meanwhile, gold prices rose to a record high above $3,160 an ounce as investors increasingly turned to the valuable metal, traditionally considered a safe haven, amid market turmoil.

Trump and the trade war with China

The commitments in the Rose Garden led to further escalation by Trump Trade war with China and opened new fronts worldwide. The president has repeatedly emphasized that these measures will boost domestic manufacturing and, in his view, address unfair trade practices.

The US stock market had already had that before Wednesday worst start recorded in a year since 2022. Trump's erratic stance on the level and scope of tariffs has unsettled investors and roiled global markets.

Reactions from Asia

China responded to the US measures on Thursday, calling them "typically unilateral and bully behavior" and vowing to "resolutely take countermeasures to protect its own rights and interests." A spokesperson for the Department of Commerce said in a statement opinion that China calls on the United States to immediately reduce unilateral tariffs and resolve differences appropriately through equal dialogue.

Japanese Chief Cabinet Secretary Yoshimasa Hayashi called the new tariffs "extremely regrettable" and said they could have a "significant impact on U.S.-Japan economic relations." The Japanese government will take “all necessary measures” to ensure that Japan is not subject to such tariffs.

South Korea's incumbent President Han Duck-soo called on the government to "mobilize all capacities to overcome the trade crisis." South Korea's auto industry, led by Hyundai, will also be hit by the auto tariffs, while a separate 25% tariff on steel products that Trump imposed last month will put major pressure on the country's steel industry, as South Korea is the fourth-largest steel exporter to the United States.

Taiwan's government called Trump's tariffs "extremely unreasonable" and "unfair" and vowed to submit "serious comments" to the US. While Taiwan's key industry - the vital semiconductor industry that exports the world's most advanced computer chips - was spared, Taiwan said the calculation of the tariff rate had "no scientific basis."

Reporting by CNN's Simone McCarthy, Lex Harvey and Eric Cheung.