Trump tariffs: Why are Asian markets witnessing a ‘bloodbath’?

Asian stock markets are slumping as the shockwaves from US President Donald Trump’s tariffs continue to reverberate across the globe.

Major indexes from Shanghai to Tokyo and Sydney to Hong Kong plunged when they opened on Monday. “It’s a bloodbath,” one analyst told the BBC. As a region that manufactures so many of the goods sold globally, Asian countries and territories are being hit directly by the tariffs.

They are also particularly sensitive to the impact of fears that a global trade war could trigger a slowdown or even a recession in the world’s biggest economy.

By midday, Japan’s Nikkei 225 benchmark index was down 6%, the ASX 200 in Australia was 4% lower and the Kospi in South Korea was 4.7% lower.

Slumps in mainland China, Hong Kong and Taiwan were exacerbated as investors caught up with the big falls seen in other markets on Friday as they were closed for public holidays. The Shanghai Composite was down more than 6%, while the Hang Seng and Taiwan Weighted Index plunged by around 10%. “Tariffs are feeding into expectations around inflation and a recession,” said Julia Lee, Head from FTSE Russell – a subsidiary of the London Stock Exchange Group. Goldman Sachs has raised its estimation of a US recession in the next one year to 45% – up from a previous estimate of 35% – as the investment banking giant lowered its economic growth forecast for the country. Other Wall Street firms have also revised their recession forecasts in the wake of Trump administration’s tariff adjustments. JPMorgan now sees a 60% chance of a US and global recession. A significant slowdown in the US economy would have major repercussions for Asian exports as the US is such an important market for goods from the region. “Asia is bearing the brunt of the US tariff hike. While there could be some room for negotiation, a new regime of higher tariffs are here to stay,” remarked Qian Wang, Asia Pacific chief economist, at investment firm Vanguard.