New Delhi [India], February 3 : Asian stock markets faced heavy selling pressure on Monday's opening session after US President Donald Trump announced new tariffs on multiple countries.
The US government announced to impose a 25 per cent tariff on imports from Canada and Mexico and a 10 per cent tariff on Chinese goods, which will take effect on Tuesday.
The announcement triggered panic among investors, leading to a sharp decline in major Asian stock indices.
The major Asian indices including Japan's Nikkei 225 index fell more than 2.27 per cent, while Hong Kong's Hang Seng index dropped 2.07 per cent. Taiwan's weighted index saw the biggest decline, losing over 3.74 per cent, and South Korea's KOSPI index fell 2.87 per cent at the time of filing this report.
The Indian stock futures are also down with the tariff effect, at the time of filing this report Nifty futures down by 0.83 pc.
The fear of a potential trade war has made investors cautious, leading to heavy selling in stock markets. Investors are worried that the tariffs could slow down global trade, affecting businesses and consumers worldwide.
Ajay Bagga Banking and Market Expert told ANI, "A doom loop starts for global economies and markets start going down in anticipation. Trump 2.0 fears are at the centre of the plate today and safe haven buying of gold, Swiss franc, Yen will be the only place to hide in these Tariff wars induced risk off a firestorm."
He further added, "Trump Tariffs have become a grim reality for the markets, geopolitics and economies globally. Elevated levels of global markets, the widespread and elevated nature of tariffs and the brazen statements of TrumpPolitics including once again asking Canada to become the 51st State of the USA are combining to roil risk sentiments across the board."
Analysts also noted that the second-order effects of the tariffs, after the initial fall in stocks, are competitive currency devaluations by exporters led by China. The third-order effects will be the intense dumping of goods produced by the already excess capacity afflicted Chinese economy.
Trump 2.0 fears are at the centre of the plate for markets on Monday and experts highlighted that safe-haven buying of gold, Swiss franc, and Yen will be the only place to hide in these tariff wars induced risk off fire storms.
Asian markets often react strongly to US policies, especially when they involve trade restrictions. China, in particular, plays a key role in global supply chains, and tariffs on Chinese goods could lead to higher prices and disruptions in the market.
At the time of writing this report, selling pressure remained high in most Asian markets.