Asian markets experienced deep red across the board on Thursday after U.S. President Donald Trump started a trade war with tariffs that were stronger than expected. This ruling was met with dismay by much of the investing community, especially by those worried that it will negatively affect global economic growth. These tariffs are being implemented retroactively. This move comes even as one of the administration’s own top economic advisers has raised alarms that this will put the brakes on global markets.
Asian equities were hammered across the board, most noticeably in Japan and Vietnam. Investors reacted dramatically to the announcement of the new tariffs. Trump’s last time in the White House has become a touchstone for market analysts gauging what’s happening now. They might remember that at the same time, the U.S. stock market experienced a 24% drop in value. Given this historical context, it’s no surprise that some are asking if a similar pattern might repeat itself this time around.
Hiroshi Matsumoto, a senior fellow at Pictet Japan, underscored just how punishing the tariffs have become. He spoke to their tremendous influence on corporate behaviour in Japan. He stated,
“The tariffs were worse than expected… corporate Japan’s profits will likely be hit hard, which makes it difficult to say that Japanese stocks are being oversold.”
In fact, the unexpected severity of these tariffs are being cited as a tapering storm cloud and one of the main drivers forcing Asian markets lower. Investors are cautious—having learned from previous experiences with Trump’s agenda and its consequences. As a result, the proposal has hit the radar screens of almost every analyst tracking major streetcar activity. They’re gauging what these tariffs would mean for Asian markets and for the global economy at-large.
Even with the treasurers’ ominous alerts about the global backlash they would face, Trump has doubled down on his strategy. His administration’s actions have sparked debate about the long-term viability of such economic measures, particularly in light of historical trends observed during his first term. Meanwhile, investors are understandably nervous given the unpredictable nature of these tariffs. They fear that present day market conditions are reminiscent of historical downturns.