US, Asia stocks crash first after Trump tariffs sap risk

Global financial markets were hit by a sweeping selloff after US President Donald Trump’s bid to remake the world trading order proved more aggressive than expected. US and Asian stocks were among the first to react as alarmed investors searched for havens.

From Sydney to Seoul, stocks plunged as trading opened in Asia within hours of Trump’s announcement, with an index in Japan sinking to the lowest level in almost eight months. The flight to havens also strengthening the Japanese yen and gold, which touched a new record high. Global corporations relying on international trade such as Apple Inc. and Nike Inc. slumped in after-market trading.

The announcement of a minimum 10% tariff on all exporters to the US, and additional duties for biggest trading partners including China, Japan and the European Union, spooked investors who remain wary on how the levies will impact global growth. Two months into Trump’s presidency, optimism has vaporized in the market, with equity strategists trimming forecasts for US stocks and central bankers starting to factor in potential impact on inflation.

“The unexpectedly high tariffs are set to weigh on sentiment across Asia, where export-driven economies now face a tough trade-off for growth with the heightened trade restrictions,” said Jun Rong Yeap, a market strategist at IG Asia Pte.

Trump’s announcement came after three days of gains for the US S&P 500 index as hopes were dashed the tariff program would have a lighter touch. Traders across asset classes must now brace for what promises to be a grueling stretch of trade negotiations, against an economic backdrop that has shown signs of softening as companies and consumers adjust to Trump’s offensive.

Oil slumps

Commodities that are sensitive to growth also fell. West Texas Intermediate, the US oil price, and copper, a popular measure of global output, both fell at least 2% early Thursday in Asia. 

The White House said steel and aluminum imports won’t be subject to reciprocal tariffs in a move that will provide at least some relief to domestic buyers already incurring 25% duties on all imports of the key metals used in everything from automobiles to dishwashers.

“While the tariff measures announced were more severe than expected, the question over how long these tariffs will remain in place is more open-ended due to Trump’s inclination to be a deal maker,” said Tim Waterer, chief market analyst at KCM Trade in Sydney.

US Treasury Secretary Scott Bessent urged US trading partners against taking retaliatory steps against Trump’s new set of tariffs. “As long as you don’t retaliate this is the high end of the number,” Bessent told Bloomberg Television. 

Among the gloom some saw pockets of optimism. To Steve Chiavarone at Federated Hermes, Wednesday’s announcement could mark the most draconian levels of tariffs, and subsequent trade negotiations could lead to lower rates, which would be good for markets.

“This may create enough of a selloff over the next day or so that it creates a buying opportunity,” Chiavarone said. “Worst case scenario today would’ve been a low rate with threats of escalation. I’d rather, at this point, have higher rates with the potential to deescalate.”

Big stocks crash first

Shares of companies linked to sectors that will be hardest hit by the new round of levies were sharply lower in late New York trading. Nike Inc., Gap Inc. and Lululemon Athletica Inc. all fell at least 7%. They rely on goods and factories from Vietnam. Apple Inc., whose supply chain is heavily dependent on China, fell as much as 6.9%. Chipmakers such as Nvidia Corp. and Advanced Micro Devices Inc. were down, as were multinationals Caterpillar Inc. and Boeing Co.

Prior to the tariff announcement, China had taken steps to restrict local companies from investing in the US, according to people familiar with the matter. The move could give Beijing more leverage for potential trade negotiations with the Trump administration.

Some of the main moves in markets soon after the sweeping 'reciprocal' tariffs were announced:

Stocks

• S&P 500 futures fell 2.9% as of 9:35 a.m. Tokyo time

• Hang Seng futures fell 0.5%

• Nikkei 225 futures (OSE) fell 3.4%

• Japan’s Topix fell 2.8%

• Australia’s S&P/ASX 200 fell 1.6%

• Euro Stoxx 50 futures fell 1.6%

Currencies

• The Bloomberg Dollar Spot Index fell 0.4%

• The euro rose 0.4% to $1.0892

• The Japanese yen rose 0.7% to 148.17 per dollar

• The offshore yuan fell 0.3% to 7.3191 per dollar

Cryptocurrencies

• Bitcoin fell 2.8% to $83,214.92

• Ether fell 3.4% to $1,818.25

Bonds

• The yield on 10-year Treasuries declined seven basis points to 4.06%

• Australia’s 10-year yield declined 14 basis points to 4.28%

Commodities

• West Texas Intermediate crude fell 2.7% to $69.75 a barrel

• Spot gold rose 0.6% to $3,152.68 an ounce