Key points
- Trump has imposed tariffs on friends and rivals
- Imposed 34pc on China
- 20pc on European Union, and 24pc on Japan
HONG KONG: Equity markets suffered on Thursday after Donald Trump delivered a “haymaker” blow with sweeping tariffs against US partners and rivals, fanning a global trade war that many fear will spark recessions and ramp up inflation.
Tokyo’s Nikkei led an Asian selloff, collapsing more than four percent, while US futures plunged, safe haven gold hit a record high and the yen jumped one percent amid worries that retaliation will send the crisis spiralling.
Trade deficits
The panic came after the US president unveiled a blitz of levies aimed at correcting trade deficits with other countries after what he says has been years of the United States being “ripped off”.
Trump claimed that “for decades, our country has been looted and plundered by nations near and far, both friend and foe alike”.
Trump reserved some of the heaviest blows for what he called the “nations that treat us badly,” including 34 percent in new levies on China, 20 percent on key ally the European Union and 24 percent on Japan.
A number of other countries will face specifically tailored tariff levels, and for the rest, Trump said he would impose a “baseline” tariff of 10 per cent. Auto tariffs of 25 percent kicked in on Thursday.
Investors are now steeling themselves for retaliatory measures, with governments making their anger clear.
China vowed “countermeasures” and urged Washington to cancel the tariffs, while calling for dialogue. Japan said the move was “extremely regrettable” and could contravene World Trade Organization rules.
European Union
European Union chief Ursula von der Leyen called Trump’s announcement a “major blow to the world economy” but vowed the bloc was “prepared to respond”.
Thailand said it had a “strong plan” to handle the new US measures while Canadian Prime Minister Mark Carney warned “we are going to fight these tariffs with counter measures. We are going to protect our workers”.
Tokyo pared its hefty drop slightly but remained well under pressure, while Hong Kong, Sydney, Seoul, Manila and Bangkok gave up more than one percent. There were also losses in Shanghai, Singapore, Wellington and Mumbai.
Wall Street
Vietnam’s stock exchange dived five percent after the country was hit with levies of almost 50 percent.
Wall Street futures were also battered while European futures were also deep in the red.
Gold hit a new peak of $3,167.84 and the Japanese yen strengthened to 147.69 per dollar from 150.50 the day before.
