Asian stocks see worst drop in decades after Trump tariffs

BBC: ASIA-PACIFIC stocks from Shanghai to Tokyo and Sydney to Hong Kong plunged on Monday by levels not seen in decades, as global markets continue to reel from US President Donald Trump’s tariffs.

The Shanghai Composite was down more than 8% at one point, Hong Kong’s Hang Seng dropped more than 13% and Japan’s Nikkei 225 closed down by 7.8% – moves that one analyst described to the BBC as a “bloodbath.”

European markets too fell in early trading, with banks and defence firms seeing the biggest drops. This follows global slumps last week after Trump announced new tariffs between 10% and 46% on most countries.

This is a blow for Asia’s manufacturing hubs that count the US as a key market for exports ranging from clothes to cars.

These include wealthy allies like Japan and South Korea, which face 26% tariffs, as well as developing countries like Vietnam that are bracing for a 46% levy – Trump called the fast-growing economy one of the “worst offenders.”

Also on that unenviable list are Cambodia (49%), Thailand (36%) and China, which will face 54% tariffs in total.

Others like Singapore, New Zealand and Australia have already had a so-called baseline 10% tariff go into effect.

“Asia is bearing the brunt of the US tariff hike. While there could be some room for negotiation, a new regime of higher tariffs is here to stay,” investment firm Vanguard’s Asia Pacific Chief Economist Qian Wang said.

Asian economies are also particularly sensitive to fears that a global trade war could trigger a slowdown or even a recession in the US, the world’s biggest economy. That, in turn, would further hurt Asian exports.

Slumps in mainland China, Hong Kong and Taiwan were exacerbated as investors caught up with the big falls seen in other markets on Friday as they were closed for public holidays.

FTSE Russell, a subsidiary of the London Stock Exchange Group, Head of Client Coverage Julia Lee said, “Tariffs are feeding into expectations around inflation and a recession.”

Goldman Sachs now forecasts there is a 45% chance the US will fall into recession in the next 12 months – up from a previous estimate of 35% – as the investment banking giant lowered its economic growth forecast for the country.

Other Wall Street firms have also revised their recession forecasts in the wake of Trump’s tariff announcement. JPMorgan now sees a 60% chance of a US and global economic downturn.

“This is negative to the global and Asia economy, especially those small open economies, both in the short term and long-term.”

Countries from Vietnam to Bangladesh have become highly reliant on the US as an export market.