Asian markets fall as Trump’s tariffs, including 104% on China, take effect

(AFP/Getty Images)

By Lily Kuo

China, the world’s biggest exporter, was hardest hit by Trump’s “Liberation Day” tariff blitz, but duties on 85 other countries — including 49 percent on Cambodia and 46 percent on Vietnam — have also now kicked in.

Stocks in Asia traded lower when they opened Wednesday after another day of wild gyrations in U.S. markets with the S&P 500 index closing down 1.5 percent, bringing its total loss since mid-February to almost 20 percent — nearing a bear market.

Hong Kong’s Hang Seng Index, on which many Chinese exporters are listed, fell by almost 4 percent when trading opened Wednesday although it rebounded somewhat in later trading.

Japan’s benchmark Nikkei 225 was trading more than 4 percent lower in the early afternoon, while Australia’s ASX 200 index lost almost 2 percent and South Korea’s KOSPI was down 1.4 percent.

White House press secretary Karoline Leavitt on Tuesday confirmed that the tariffs on China would rise to 104 percent. “It was a mistake for China to retaliate. When America is punched, [the president] punches back harder,” Leavitt said at a briefing Tuesday.

But she also suggested Trump was open to talking — as long as Beijing made the first move. “The president also wanted me to tell all of you that if China reaches out to make a deal, he’ll be incredibly gracious, but he’s going to do what’s best for the American people,” Leavitt said. “China has to call first.”

It was not clear on Wednesday how Beijing would respond. State media on Wednesday was awash with commentary saying China could not back down.

“The weaker you are, the happier the United States is and the harder it will hit you,” said an article on Niu Tanqin, an influential blog run by a former journalist with the state news agency, Xinhua.

The longer that the trade fight goes on, the more Beijing sees U.S. moves as simply an effort to contain China. “Beijing is losing patience with the Trump team, believing that they have no sincerity in negotiating,” said Zhao Minghao, a professor at Fudan University’s Center for American Studies.

Other countries are trying hard to broker deals with the Trump administration to avert tariffs, with Treasury Secretary Scott Bessent telling CNBC that nearly 70 countries had approached the United States about negotiating over trade barriers.

Argentina, Vietnam and Israel have indicated they will drop their tariff and regulatory barriers to U.S. exports, while South Korea and Japan are now actively pursuing negotiations.

Trump said on social media Tuesday he had a “great call” with South Korea’s acting president about a potential deal to remove the 25 percent tariff Trump threatened to impose on the ally’s exports.

The steep tariffs on Chinese goods will almost certainly raise prices for American consumers on products including clothes, shoes and electronics — something Chinese state media have been at pains to point out.

“Manufacturers here cannot absorb the burden,” Liang Mei, president of the China Toy and Juvenile Products Association, was quoted as telling the state-affiliated Global Times newspaper Wednesday. U.S. retailers would shoulder part of the cost and the rest “will be passed on to American consumers,” Liang said.

Naomi Fink, chief global strategist at Nikko Asset Management in Tokyo, said the new tariffs will “first and foremost be a blow to U.S. consumers,” which will ultimately affect exporters to the U.S. But the ultimate impact on domestic U.S. interests is significant, and countries on the receiving end of tariffs recognize that, she said.

“The thing here, and I think China even stated it, is that the only reason they’re retaliating is because they know it’s a credible threat to the U.S. consumer, who’s also the U.S. voter, and they know the U.S. consumer is wearing the cost,” Fink said.

Trump on Tuesday tripled the tariff rate he had announced on low-value packages from China, closing a loophole that allowed Chinese companies like Shein and Temu to sidestep duties on shipments worth less than $800. From June 1, those packages will face a tax of 90 percent of their value, up from the originally planned 30 percent duty.

While other countries have approached the White House to negotiate, Beijing has instead hit back with its own tariffs and deployed other measures like export controls and import bans. Escalation on both sides makes the possibility of talks less likely, analysts said.

“Beyond a certain point, further escalation loses meaning,” said Lizzi C. Lee, an economy expert at the Asia Society Policy Institute’s Center for China Analysis. “China would likely decide there’s no point in continuing to engage — and at that stage, retaliation could take forms the U.S. isn’t ready for.”

Retaliation could involve suspending cooperation to stop fentanyl and related chemicals from reaching the United States; cutting off imports of U.S. products that depend on the Chinese market like farm products, services or energy; or rapidly opening trade channels with other countries hit hard by the tariffs, Lee said.

Well-connected Chinese blogs have also suggested Beijing might ban on the importation of U.S. movies to China.

Here’s how the tariff on Chinese goods got to 104 percent:

• With a Feb. 1 executive order, Trump imposed a 10 percent tariff on Chinese goods, saying it was punishment for Beijing’s lack of progress in stopping the flow of fentanyl and precursor chemicals to the United States.



• Beijing responded with a 15 percent levy on imports of U.S. coal and liquefied natural gas, as well as a 10 percent tariff on agricultural equipment and crude oil.



• At the end of February, Trump announced an additional 10 percent tax on Chinese goods, again citing the opioid epidemic. Beijing, which insists that this a U.S. public health issue, imposed a 15 percent duty on imports of American farm products including chicken, pork and soy — a move designed to inflict pain in Trump-supporting agricultural states.



• In his “Liberation Day” tariff blitz, Trump imposed a further 34 percent tariff on all Chinese goods, to come into effect April 9, taking the blanket tariff to 54 percent.



• China responded two days later by levying a 34 percent blanket tariff on all products from the United States and condemned the Trump administration’s “unilateral bullying.” It also further restricted exports of rare earth minerals, blacklisted a slew of American companies, and filed a lawsuit with the World Trade Organization.



• Trump said Monday that if Beijing did not promptly withdraw the blanket measure, he would increase the duty on all Chinese goods by a further 50 points, taking the minimum tariff to 104 percent.