Asian equities are taking a beating as markets react sharply to the latest round of tariffs introduced by Donald Trump, sending tremors across the global financial system.
Markets from Tokyo to Sydney and Hong Kong to Shanghai opened sharply lower on Monday, triggering alarm among investors. “It’s carnage out there,” an analyst remarked.
The region, a powerhouse in global manufacturing, is feeling the immediate sting of the tariff escalation. In addition to direct exposure, there’s growing unease that a broader trade war might derail economic momentum in the United States, potentially pushing the world’s largest economy toward a slowdown or even recession.
By mid-morning in Asia, Japan’s Nikkei 225 had shed 6%, Australia’s ASX 200 was down 4%, and South Korea’s Kospi dropped by 4.7%.
Market holidays on April 4 (Friday) in mainland China, Taiwan and Hong Kong meant Monday’s sharp declines also reflected a delayed reaction to the prior global sell-off. The Shanghai Composite tumbled over 6%, while the Hang Seng and Taiwan Weighted Index registered losses close to 10%.
Goldman Sachs has revised the probability of a US recession within the next year to 45%, a jump from its earlier 35% projection, as it lowered its economic growth expectations. Other major financial institutions, including JPMorgan, have followed suit, now predicting a 60% likelihood of a US-led global economic contraction.
Given the heavy dependence of many Asian economies on exports to America, a US downturn could prove particularly damaging. "Asia is facing the full force of these tariff measures. While talks may offer some hope, elevated duties are likely a fixture now," said Qian Wang, Vanguard’s chief economist for Asia Pacific.
She warned that the consequences would be particularly severe for smaller, trade-dependent nations, both immediately and over time. Countries like Vietnam and Bangladesh have grown increasingly reliant on the US as a key buyer of their exports.
Last week’s tariff announcement included a 46% levy on Vietnamese products and 37% on goods from Bangladesh. Major American companies, such as Nike and Lululemon, source much of their merchandise from Vietnam.
Bangladesh, meanwhile, sends garments worth $8.4 billion annually to the US, according to its main apparel export body.
“Given how much of its output goes to the US, Asia is likely to be hit harder than other regions,” a US official remarked.
Last Friday, market volatility deepened after China unveiled retaliatory tariffs of its own in response to the US move. All three of the leading US stock indexes slumped by over 5%, with the S&P 500 shedding nearly 6%—marking its worst weekly performance since the early days of the pandemic in 2020. In the UK, the FTSE 100 dropped nearly 5%, marking its biggest single-day loss in five years. German and French exchanges also suffered steep declines.
The cumulative losses since Trump’s tariff announcement have wiped trillions off global stock valuations. The sweeping 10% import tax affects goods from every corner of the world, with particularly high rates applied to exports from nations such as China, the EU, and Vietnam.