Asian stocks are facing lowest drop in decades after Trump tariffs

Asian stocks from Shanghai to Tokyo and Sydney to Hong Kong tumbled to levels not seen in decades on Monday, as global markets grapple with US President Donald Trump's tariffs.

The Shanghai Composite was down more than 8% at one point, Hong Kong's Hang Seng dropped more than 13% and Japan's Nikkei 225 fell as much as 7.8% - with one analyst telling the BBC it was a "bloodbath".

European markets also fell in early trade, with banks and defence firms seeing the biggest declines. It follows a global slump last week when Trump announced new tariffs of between 10% and 46% on most countries.

It's a blow to Asia's manufacturing hubs, which count the US as a key market for exports from clothing to cars.

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These include wealthy allies such as Japan and South Korea, which have been hit with 26% tariffs, as well as developing countries such as Vietnam, which is set to impose tariffs of 46% - Trump described this fast-growing economy as one of the "worst offenders".

The unsavory list also includes Cambodia (49%), Thailand (36%) and China, which will be hit with tariffs of 54% in total.

Other countries such as Singapore, New Zealand and Australia have already imposed so-called baseline 10% tariffs.

"Asia is bearing the brunt of tariff hikes by the US. Although there may be some room for negotiation, the new regime of high tariffs will remain in place," said Qian Wang, chief economist for the Asia Pacific region at investment firm Vanguard.

Asian economies are also particularly vulnerable to fears that the global trade war could trigger a slowdown or even recession in the US, the world's largest economy. In turn, that would further hurt Asian exports.

The declines in mainland China, Hong Kong and Taiwan extended further, as investors looked to pare the big drops seen in other markets on Friday as they were closed for a public holiday.

The Shanghai Composite closed 7.3% lower and the Taiwan Weighted Index lost 9.7% - its biggest drop on record.

The ASX 200 in Australia fell 4.2% and the Kospi in South Korea closed 5.6% lower.

The Hang Seng closed down 13.22%, its biggest drop since 2008.

"Tariffs are raising expectations about inflation and recession," said Julia Lee, head of client coverage at FTSE Russell, a subsidiary of the London Stock Exchange Group.

Goldman Sachs now estimates there is a 45% chance the US will go into recession in the next 12 months - up 35% from a previous estimate - as the investment banking giant lowered its economic growth forecast for the country.

Other Wall Street firms have also revised their recession forecasts following Trump's tariff announcement. JPMorgan now sees a 60% chance of a US and global economic recession.

"This is negative for the global and Asian economy, especially for those small open economies, both in the short term and the long term."

Countries from Vietnam to Bangladesh have become highly dependent on the US as an export market.

Many major US brands produce goods in Vietnam, including Nike and Gap.

Bangladesh exports $8.4 billion (£6.5 billion) worth of garments to the US a year, according to the Bangladesh Garment Manufacturers and Exporters Association, a trade body.

So Trump's announcement of 37% tariffs on Bangladesh last week is bad news for the South Asian nation.

"Asia is likely to bear the disproportionate brunt of this turmoil because Asia sends more exports to the US than other markets," said Frank Lavin, former undersecretary for international trade at the US Department of Commerce. China, Asia's largest economy, has also retaliated with its own tariffs, further adding to the global stock market turmoil on Friday. All three major US stock indices fell more than 5%, with the S&P 500 dropping nearly 6%, marking the worst week for the US stock market since 2020. In Britain, the FTSE 100 fell nearly 5% - its biggest drop in five years, while exchanges in Germany and France also saw similar declines. Ms Lee also highlighted that the global stock market decline is set to continue: "A drop in US futures trading pointed to another tough session on Wall Street tonight." Global stock markets have lost trillions of dollars since Trump announced new 10% import taxes on goods coming from every country, with products from dozens of nations, including major trading partners such as China, the European Union and Vietnam, facing far higher rates.

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Asian stocks are facing lowest drop in decades after Trump tariffs

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