Asian stocks see their worst drop in decades after Trump tariffs

Asian stocks fell sharply on Monday. Markets in Shanghai, Tokyo, Sydney, and Hong Kong hit lows not seen in decades. This decline follows US President Donald Trump's new tariffs.

The Shanghai Composite dropped over 8% at one point. Hong Kong's Hang Seng fell more than 13%. Japan's Nikkei 225 closed down by 7.8%. An analyst called it a "bloodbath."

European markets also declined in early trading. Banks and defense firms experienced the biggest losses. This follows last week's global slumps after Trump announced tariffs of 10% to 46%.

Asia's manufacturing hubs are particularly affected. They rely heavily on the US for exports like clothes and cars. Countries like Japan and South Korea face 26% tariffs, while Vietnam faces a staggering 46%.

Other countries facing high tariffs include Cambodia (49%), Thailand (36%), and China (54%). Singapore, New Zealand, and Australia have already implemented a baseline tariff of 10%.

"Asia is bearing the brunt of the US tariff hike," said Qian Wang from Vanguard. He noted that higher tariffs are likely here to stay.

Asian economies worry about a potential global trade war. A slowdown or recession in the US could hurt Asian exports further.

Investors reacted strongly as mainland China, Hong Kong, and Taiwan caught up with Friday’s market falls after public holidays. The Shanghai Composite closed down by 7.3%, while Taiwan’s index lost 9.7%, its largest drop ever.

In Australia, the ASX 200 fell by 4.2%. South Korea's Kospi ended down by 5.6%. The Hang Seng recorded its biggest drop since 2008 at 13.22%.

"Tariffs are raising inflation expectations and fears of recession," said Julia Lee from FTSE Russell.

Goldman Sachs now estimates a 45% chance of a US recession within a year—up from an earlier estimate of 35%. Other Wall Street firms have also adjusted their forecasts following Trump's announcement.

"This is negative for both global and Asian economies," experts warn.

Countries like Vietnam and Bangladesh depend heavily on the US for exports. Major brands such as Nike produce goods in Vietnam.

Bangladesh exports $8.4 billion worth of garments annually to the US, according to its trade body. Trump's announcement of a new tariff on Bangladesh is troubling for this South Asian nation.

"Asia will feel this turmoil more than others," said Frank Lavin from the US Department of Commerce.

China has responded with its own tariffs, worsening global stock market turmoil last Friday. All three major US stock indexes fell over 5%, marking their worst week since 2020.

In the UK, the FTSE 100 plunged nearly 5%, its steepest fall in five years. Exchanges in Germany and France faced similar declines.

Ms Lee noted that global stock market declines may continue: "US futures trading lower suggests another tough session tonight."

Global markets have lost trillions since Trump announced new import taxes on goods from many countries—including key partners like China and Vietnam—facing much higher rates now.