Equities in Asia-Pacific appeared set for declines on Wednesday, with investors reacting to the imminent activation of country-specific tariffs by U.S. President Donald Trump. The measures, which expand upon existing duties, threaten to worsen trade tensions and disrupt supply chains across export-reliant economies.
Australian markets signalled a weaker start, with S&P/ASX 200 futures trading at 7,391, down sharply from the index’s previous close of 7,510. Japanese benchmarks also faced pressure, as Nikkei 225 futures in Chicago hovered at 31,880 while Osaka contracts settled at 32,140—both well below the Nikkei’s last closing figure of 33,012.58. Hong Kong’s Hang Seng index futures reflected similar strain, dipping to 19,300 compared to the prior session’s close of 20,127.68.
The latest tariffs, effective from midnight U.S. time, compound a 10% baseline duty imposed days earlier. Chinese imports will now face cumulative levies of 104%, according to White House officials.
Other Asian nations, including Vietnam and Cambodia, confront steep tariff hikes of 46% and 49% respectively, jeopardising critical export sectors. Japan and South Korea, key U.S. allies, are not spared, with duties of 24% and 25% threatening their automotive and electronics industries. South Korea’s leadership has labelled the situation “extremely serious” for its steel and manufacturing sectors, while Japan grapples with potential disruptions to its $40 billion vehicle export market.
Regional indices have already mirrored the turmoil, with Hong Kong’s Hang Seng plunging over 13% earlier this week—its steepest single-day drop since 2008. Mainland China’s Shanghai Composite slid 7%, and Taiwan’s benchmark suffered a historic 10% collapse.
Smaller economies like Vietnam and Bangladesh, heavily dependent on U.S.-bound apparel and footwear exports, face acute risks. Vietnam’s shipments to major brands such as Nike and Gap are under threat, while Bangladesh’s $8.4 billion garment trade with America hangs in the balance.
Globally, the fallout has reverberated through European and U.S. markets. The UK’s FTSE 100 tumbled nearly 5%, marking its worst performance in five years, while Wall Street’s Dow Jones Industrial Average shed over 4,500 points across four sessions. Apple shares led declines as new China tariffs threaten to inflate production costs.
The S&P 500, down 1.57% to 4,982.77, flirted with bear market territory—nearly 19% below its February peak—and closed below 5,000 for the first time since April 2024. Goldman Sachs now estimates a 45% probability of a U.S. recession within a year, citing trade policy volatility.
China has vowed retaliation against what it terms “unilateral bullying,” raising fears of a protracted trade war. The European Union, while considering countermeasures, remains open to negotiations. Meanwhile, the Reserve Bank of India is widely expected to announce its second consecutive rate cut today, potentially lowering the policy rate to 6% to cushion economic headwinds.