The main index of Japan, the Nikkei, was down nearly 4% an hour and a half after the session opened, with markets in South Korea, New Zealand, and Australia also recording declines.
On Tuesday, in the United States, the S&P 500 index fell by 1.6% after an initial gain of 4.1%. This value left it nearly 19% below the record set in February. Meanwhile, the Dow Jones Industrial Average dropped 0.8%, and the Nasdaq Composite lost 2.1%.
Uncertainty remains regarding the next steps of the U.S. President, Donald Trump, in relation to the trade war.
The implementation of the higher tariffs is scheduled for midnight Eastern Time (05:00 in Lisbon), leaving investors unclear about how to proceed, as reported by the Associated Press.
The White House confirmed on Tuesday that the United States would begin imposing a 104% tariff on Chinese imports from today, fulfilling the threat of a 50-percentage-point tariff increase.
The overnight and early morning decline in Asia followed a rally of global stocks at the beginning of Tuesday, with indices rising 6% in Tokyo, 2.5% in Paris, and 1.6% in Shanghai.
After today’s opening, South Korea’s Kospi was down 1% to 2,315.27, whereas Australia’s S&P/ASX 200 fell 2% to 7,359.30. New Zealand’s stocks also reported declines.
Analysts have been warning about the possibility of further fluctuations in financial markets due to uncertainty over how long Trump may rigidly implement tariffs on imports, which will raise prices for U.S. buyers and slow the economy.
If maintained for an extended period, economists and investors anticipate a recession. However, if the Republican President reduces these tariffs through relatively quick negotiations, the worst scenario might be avoided, they suggest.
Donald Trump stated on Tuesday that a conversation with the acting President of South Korea helped them reach “the likelihood of a great DEAL for both countries.”
On the same day, Japanese stocks led global markets higher after Japanese Prime Minister Shigeru Ishiba named the trade negotiator for talks with the United States following his conversation with Trump.
China declared it would “fight to the end” and warned of the need for retaliatory measures after the American leader threatened further tariff increases on the world’s second-largest economy.
The U.S. Trade Representative also testified before a Senate committee, saying that about 50 countries have already been contacted and conveyed the following message: “If you have a better idea to achieve reciprocity and reduce our trade deficit, we want to talk to you, we want to negotiate with you.”
Trump’s trade war is viewed as an attack on globalization, which has shaped the global economy and helped lower product prices on store shelves but also led to industrial jobs moving to other countries, according to the AP.
