Asian markets tumbled on Wednesday as China mulled its response to President Trump’s latest round of tariffs. The steep new levies, which took effect just after midnight, imposed a staggering 104 percent tariff on Chinese goods. The broad impact of these tariffs has heightened fears of a potential global recession.
Since the announcement of the tariffs last week, stock markets around the world have been in turmoil. Yields on bonds, which traditionally serve as safe investments in times of uncertainty, have risen. In Asia, Japan’s Nikkei closed down nearly 4%, South Korea’s KOSPI fell 1.74%, and Taiwan’s composite index shed 5.79%.
Hong Kong’s benchmark Hang Seng Index opened down more than 3% before recovering to close up about 1%. In mainland China, key indexes closed up more than 1%, despite Chinese goods being the hardest hit. European stock markets opened with sharp downturns.
In London, Frankfurt, and Paris, share prices fell once more in early trading, after recovering some of their value earlier this week.
Markets react to new tariffs
The French and German markets remained almost 12 percent lower than they were a week ago, when the new tariffs were announced.
China’s foreign ministry warned that it was ready to respond. “We will not let anyone take away the Chinese peoples’ legitimate right to development,” foreign ministry spokesperson Lin Jian said on Wednesday. “We will not tolerate any attempt to harm China’s sovereignty, security, and development interests.
We will continue to take resolute and strong measures to safeguard our legitimate rights and interests.”
Beijing has, for now, not announced a second round of retaliatory tariffs on U.S. goods. Hopes had risen amongst some investors that the U.S. would strike trade deals to lower the tariffs over time, leaving the punitive measures as a temporary negotiating tactic. President Trump has signaled he is willing to talk, posting Tuesday on Truth Social that China “wants to make a deal, badly.” However, analysts remain cautious.
Japan, South Korea, Vietnam, and India are all engaging in talks with the U.S. to discuss the tariffs and potential trade agreements. Meanwhile, fears of a U.S. and global recession have been further heightened by the continued plunge of the S&P 500 and the decline in government bonds. JP Morgan estimates there is now a 60% chance that the world could enter a recession by the end of 2025.
