Asian markets tumbled on Wednesday as President Trump’s latest round of tariffs took effect, including a 104% levy on Chinese goods. The steep tariffs have caused stocks and bonds to slump, with Beijing hitting back with its own levies and European leaders preparing retaliation measures. The new tariffs went into effect just after midnight, impacting nearly all U.S. allies and raising import taxes on Chinese goods to more than 100%.
China’s retaliatory levies will kick in at noon Eastern time, while the European Union is also planning measures to counteract Mr. Trump’s steel and aluminum tariffs. This flurry of moves has heightened fears that the trade war could lead to a global recession.
Stock markets worldwide have suffered losses since Mr. Trump announced this latest round of tariffs last week. Yields rise when investors sell bonds, reflecting worries about inflation, shifts away from U.S. dollar assets, or the need to raise cash to cover losses on other trades.
Asian markets slumped again on Wednesday, with Japan’s Nikkei closing down nearly 4%, South Korea’s KOSPI falling 1.74%, and Taiwan’s composite index shedding 5.79%. European stocks also fell in early trading, with France’s CAC 40 index plunging, erasing its gains since the beginning of the year.
Tariffs rattle global financial markets
The market rout reflects deepening concerns that Mr. Trump’s tariffs could disrupt global supply chains, fuel inflation, and trigger a severe economic downturn. Various governments have been negotiating with the Trump administration, sending delegations to Washington and scheduling phone calls.
In industrial hubs across Asia, businesses are grappling with the effects of the levies. Factory owners in Guangzhou, China, expressed confidence in continued American demand for their exports but worry about a drop in U.S. consumer confidence and spending. The Chinese government announced a 50% tariff on imports from the United States, mirroring the extra levies imposed by Trump.
Beijing’s official report condemned the United States for tightening export controls and increasing tariffs on low-value parcels from China. In London, comparisons were drawn between President Trump’s policies and those of former British Prime Minister Liz Truss, who triggered market turmoil with proposed tax cuts funded by government borrowing. Similarly, yields on U.S. Treasuries have started to rise following Trump’s latest tariffs, signaling investors’ concern over fiscal stability.
As the trade war shows no signs of abating, global markets continue to brace for further turbulence. The specter of a U.S. and global recession has been further heightened by the continued plunge of America’s largest stock market, the S&P 500. JP Morgan estimates there is now a 60% chance that the world could enter a recession by the end of 2025.
