Asian shares slid on Monday morning after US President Donald Trump followed through on his promise to impose tariffs on Canada, Mexico and China.
Buyers are anticipating a turbulent time that could affect major company profits and halt global growth.
Canada and Mexico have said that they will hit back with retaliatory tariffs while China promised “corresponding countermeasures” and vowed to challenge Trump’s move at the World Trade Organization.
Trump has stated that the taxes are necessary to stop immigration and the flow of illegal medication into the US.
Hong Kong’s Hang Seng Index was down 0.7 %, Japan’s Nikkei 225 was 2.8 % lower, South Korea’s Kospi tumbled 3 % and Australia’s ASX 200 fell 1.9 %.
For the Lunar New Year holiday, all of China’s areas were closed.
However, the US dollar was showing power, rising to a record high against China’s rmb, while the American dollars plunged to its lowest level since 2003.
Investors are taking danger off the table right now because of the possibility of a long, drawn-out trade dispute between the world’s two largest economies, according to Tim Waterer, general market analyst at monetary services firm KCM Trade.
Which nations might be next on Trump’s tax hit list is another worry for investors, according to the statement.
The US senator has threatened to not quit it as a result of the taxes the Trump administration announced over the weekend against the country’s three largest buying partners.
Trump has also pledged to “pretty quickly” impose tariffs on the European Union.
Charu Chanana, the chief investment strategist at investment banks Saxo, cautioned that while taxes may be advantageous for the US market in the near future, they still pose significant risks in the long run.
She continued,” Repeated use of taxes would encourage other nations to reduce their reliance on the US, thereby lowering the dollar’s world standing.”
Trump has stated that he will communicate with the leaders of Canada and Mexico on Monday regarding the taxes, which are scheduled to go into effect at midnight on Tuesday.
Both China and the two nations are subject to additional 10 % tax on their US exports, while the US is subject to 25 % tariffs.