BANGKOK – The trading day in Asia started on a downward trend as a direct response to the sharp decline in U.S. stocks. This decline occurred just before the introduction of new, higher tariffs announced by U.S. President Donald Trump.
The tariffs, set at 25% on imports from Canada and Mexico, were scheduled to come into effect at the start of Tuesday. Additionally, a supplementary 10% tariff is being applied to products from China. In response, Beijing hinted through state media channels that it was preparing to retaliate, with a potential focus on U.S. agricultural exports, including farm products and food items. This is particularly significant as China is a large buyer of American soybeans and various other agricultural goods.
In the market performances, Tokyo’s Nikkei 225 index saw a decline of 1.9%, settling at 37,084.83 points. Meanwhile, Hong Kong’s Hang Seng index experienced a 1.6% drop, closing at 22,666.68 points. The Shanghai Composite index in China recorded a slight 0.2% decrease, reaching 3,310.35 points.
In South Korea, the Kospi edged less than 0.1% higher, to 2,533.77. Taiwan’s Taiex shed 0.9%, while shares in most of Southeast Asia also fell.
On Monday, the S&P 500 dropped 1.8% to 5,849.72 after Trump said there was “no room left” for negotiations that could lower the tariffs set to begin Tuesday for imports from Canada and Mexico. Trump had already delayed the tariffs once before to allow more time for talks.
The Dow Jones Industrial Average dropped 1.5% to 43,191.24, and the Nasdaq composite slumped 2.6% to 18,350.19.
Trump’s announcement dashed hopes on Wall Street that he would choose a less painful path for global trade, and it followed the latest warning signal on the U.S. economy’s strength. Monday’s loss shaved the S&P 500’s gain since Election Day down to just over 1% from a peak of more than 6%. That rally had been built largely on hopes for policies from Trump that would strengthen the U.S. economy and businesses.
After the S&P 500 set a record last month following a parade of fatter-than-expected profit reports from big U.S. companies, the market began diving following weaker-than-expected reports on the U.S. economy, including a couple showing U.S. households are getting much more pessimistic about inflation because of the threat of tariffs.
The latest such report arrived Monday on U.S. manufacturing. Overall activity is still growing, but not by quite as much as economists had forecast. Perhaps more discouragingly, manufacturers are seeing a contraction in new orders. Prices, meanwhile, rose amid discussions about who will pay for Trump’s tariffs.
The yield on the 10-year Treasury fell to 4.16% from 4.24% just before the manufacturing report’s release. It’s come down sharply since January, when it was approaching 4.80%, as worries have built about the possibility of a slowing U.S. economy.
The market’s recent slump has hit Nvidia and some other formerly high-flying areas of the market particularly hard. They fell even more Monday, with Nvidia down 8.8% and Elon Musk’s Tesla down 2.8%.
Elsewhere on Wall Street, Kroger fell 3% after the grocery chain’s Chairman and CEO Rodney McMullen resigned following an internal investigation into his personal conduct.
Wall Street’s blue Monday even pulled down stocks of companies enmeshed in the cryptocurrency economy, which had risen strongly in the morning. They initially bounced after Trump said over the weekend that his administration was moving forward with a crypto strategic reserve.
But MicroStrategy, the company that’s now known as Strategy and has been raising money to buy bitcoin, slid to a loss of 1.8%. Coinbase, the crypto trading platform, fell 4.6%.
European markets leaped on Monday after a report showed an easing of inflation in February. That should help the European Central Bank, which investors widely expect will deliver another cut to interest rates later this week.
Germany’s DAX surged 2.6%, and France’s CAC 40 jumped 1.1%. Stocks outside the United States have performed better than the S&P 500 this year, even with Trump’s promises for “America First” policies.
In other dealings early Tuesday, U.S. benchmark crude oil lost 30 cents to $68.07 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude gave up 51 cents to $71.11 per barrel.
The U.S. dollar slipped to 149.29 Japanese yen from 149.50 yen. The euro declined to $1.0484 from $1.0488.
Bitcoin fell to $83,750, according to CoinDesk, down 10.3%.
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AP Business Writers Stan Choe and Matt Ott contributed.
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