On Monday, U.S. President Donald Trump issued an executive order imposing tariffs on Canada, Mexico, and China. Fears that he might impose tariffs on other countries as well led to a significant decline in Asian stock markets today, Monday (February 3).
In the morning, Japan’s Nikkei 225 index dropped by 2.4%. South Korea’s KOSPI fell by 2.9%, while Hong Kong’s Hang Seng index declined by 1.4%. Additionally, the Shanghai Composite index also saw a decrease in stock prices.
Experts suggest that Trump’s tariff imposition has raised concerns about a potential trade war and instability in global commerce, which is causing a downturn in Asian markets.
Market analyst Yeap Jun Rong from IG, a financial services company, stated, “Trade restrictions may reduce global commercial activity and disrupt supply chains. This would increase business costs and lead to higher inflation.”
On Sunday, Trump announced a 25% tariff on nearly all goods from Mexico and Canada and a 10% tariff on Chinese products, effective from Tuesday.
Trump claimed that the tariffs were imposed to curb the smuggling of fentanyl, a synthetic drug, and to prevent illegal immigration from these three countries. However, the U.S. administration has not clarified how much the drug smuggling must decrease or how much illegal immigration must be reduced for the tariffs to be lifted.