On Thursday, equity markets experienced severe losses following Donald Trump’s imposition of broad-ranging tariffs against U.S. allies and competitors, which intensified a global trade war. Many worry this could lead to economic downturns and increased inflation.
In Tokyo, the Nikkei spearheaded a decline across Asia, plummeting over four percent, whereas US futures tumbled. Meanwhile, as investors sought safety, gold reached an all-time peak, and the Japanese yen surged by one percent.
The anxiety arose after the US president announced a series of tariffs designed to address trade imbalances with various nations, following his claim that for many years, the United States has been “taken advantage of.”
In front of the White House with American flags as a backdrop, Trump declared that “for many years, our nation has been exploited, despoiled, ravished, and plundered by countries close and distant, whether allies or adversaries.”
Trump directed his harshest criticism at countries he accused of mistreating the U.S., imposing additional tariffs such as 34% on competitor China, 20% on major ally the European Union, and 24% on Japan.
Several other nations will encounter individually customized tariff rates, while for the remaining countries, Trump stated he would apply a standard tariff rate of 10%. Additionally, the U.S. president reaffirmed his intention to introduce automobile tariffs set at 25% on Thursday.
Investors are bracing themselves for potential countermeasures that might exacerbate the crisis.
“President Trump entered the Rose Garden and unleashed the most intense trade shock the market has witnessed in many years. This move is not just a poke; it’s a powerful blow,” stated Stephen Innes from SPI Asset Management.
Wall Street had convinced itself that there would be a milder, more symbolic action. However, Trump launched a broad attack on the international supply chain instead.
This was an aggressive “shock and awe” tariff strategy, framed with the rhetoric of reciprocity but aimed at drastically reducing the trade deficit through sheer force.
He stated that the measures indicated a sharp increase in inflation risks and anticipated reductions in economic growth projections. The U.S. Federal Reserve was described as being “trapped between an aggressive monetary policy stance and a challenging low-inflation environment.”
As well as Tokyo’s hefty drop, Hong Kong shed more than two percent, Sydney and Seoul gave up more than one percent and Wellington was one percent off.
Futures for Wall Street took a hit as well, with the Dow falling by 2.4%, the Nasdaq plummeting over 4%, and the S&P 500 declining by more than 3%. Similarly, European futures showed significant losses.
Safe havens gained ground as investors rushed to offload risky assets.
The price of gold reached a record high of $3,167.84, while the Japanese yen appreciated to 147.69 per dollar from 150.50 the previous day.
The US Treasury yields dropped to their lowest point in five months — when yields fall, bond prices rise, and vice versa.
Oil prices also took significant hits, with both key contracts dropping over two percent due to concerns that economic shocks could reduce demand.
In the corporate sphere, major decliners included Japan’s technology leader Sony, which saw its stock drop by 5%. Meanwhile, its South Korean competitor Samsung experienced a decrease of nearly 3%.
The automotive giant Toyota saw a decline of around five percent, while Nissan experienced a drop exceeding four percent. Honda witnessed a decrease of approximately 2.7 percent. Additionally, SoftBank, a technology investment company listed on the Tokyo stock exchange, fell by over four percent.
Key individuals at approximately 0150 GMT
Tokyo – Nikkei 225: Fell 3.4 percent to 34,525.18
Hong Kong – Hang Seng Index: Down 2.4% at 22,638.21
Shanghai – Aggregate: DECREASED BY 0.5 PERCENT to 3,33.52
Dollar/yen: FELL to 147.81 yen from 149.39 yen
Euro/dollar: Increased to $1.0918 from $1.0814 on Wednesday
Pound/dollar: Increased to $1.3062 from $1.2985
Euro/pound: Increased to 83.56 pence from 83.33 pence
West Texas Intermediate: Down 2.6 percent to $69.88 per barrel
Brent North Sea Crude: Down 2.3% at $73.20 per barrel
New York – Dow: Increased by 0.6 percent to close at 42,225.32.
London – FTSE 100: Decreased by 0.3 percent to close at 8,608.48
