On Friday, Asian markets experienced significant declines, a reaction to the previous day's downturn in U.S. markets. This downturn was triggered by a White House announcement that import tariffs on Chinese exports to the United States would soar to an unprecedented 145 percent. Japan's Nikkei 225 and Topix indexes initially plummeted by 5 percent but managed to reduce losses to under 3 percent by the afternoon trading session.
In South Korea, the Kospi index and Australia's ASX 200 saw declines of less than 1 percent. Meanwhile, Taiwan's stock market started the day with a decline of under 1 percent but ultimately rebounded, ending with a 2.5 percent gain. Both Hong Kong's Hang Seng Index and China's Shanghai Composite Index experienced early losses of less than 1 percent, only to reverse those declines later in the day.
The volatility in Asian markets followed a steep retreat in the U.S. stock indices. The S&P 500 dropped by 3.46 percent, while the tech-heavy Nasdaq composite index fell by 4.26 percent on Thursday. The more traditional Dow Jones Industrial Average also slid, losing 2.54 percent. These declines came on the heels of a substantial rally earlier in the week, where the S&P 500 recorded its largest one-day gain since 2008.
President Donald Trump had announced a temporary 90-day pause on blanket tariffs affecting over 70 countries, yet he maintained steep tariffs on China and a baseline global tariff of 10 percent. Reports from The Washington Post indicate that representatives from over a dozen countries are now in discussions to negotiate new trade agreements with the White House. Trump is set to engage with some countries directly, while other senior officials will handle negotiations based on their existing relationships with those nations.
Export-dependent countries in Asia are racing to respond to Trump's tariffs. Japanese Prime Minister Shigeru Ishiba stated on Friday that Japan would seek to address U.S. tariffs impacting its auto and steel industries. Concurrently, South Korea's Finance Minister Choi Sang-mok announced a $6.2 billion assistance package aimed at supporting businesses that export to the U.S. Taiwanese President Lai Ching-te expressed intentions to purchase additional U.S. arms and increase investments in the United States.
The escalating trade war between Washington and Beijing is creating heightened market volatility, which is expected to negatively affect consumers in both nations. A recent estimate from the Budget Lab at Yale University suggests that the average U.S. household could face a financial setback of $4,700 due to Trump's tariffs, which are also predicted to reduce U.S. gross domestic product by approximately 1.1 percent.
Despite China's defiant stance against the tariffs, promising not to yield, the nation is grappling with its own economic challenges, including a slump in the property market, high youth unemployment, and sluggish domestic spending. The White House's announcement followed a sharp rebuke from Beijing regarding Trump's tariff increases, which included restrictions on the number of U.S. films permitted in the Chinese market.
