Asia-Pacific stocks stumbled on Tuesday, tracking a fall on Wall Street after Donald Trump reimposed tariffs on some metal imports from Brazil and Argentina and his administration threatened to impose duties on French and EU products.
Australia’s S&P/ASX 200 fell 2 per cent in morning trading as mining companies struggled following the US president’s comments, which reignited fears over the prospects for global trade. Hong Kong’s Hang Seng index slid 1.4 per cent, the CSI 300 of Shanghai- and Shenzhen-listed stocks fell 0.6 per cent and Tokyo’s Topix lost 1 per cent.
Mr Trump said in a tweet on Monday that he would reimpose tariffs on imports of steel and aluminium from Brazil and Argentina after accusing the countries of devaluing their currencies.
The US also proposed 100 per cent tariffs on up to $2.4bn of French goods in response to the country’s new digital services tax, which Mr Trump alleged unfairly targeted American technology companies. The US trade representative’s office said on Monday it was considering broadening a range of tariffs on EU goods over subsidies to airline maker Airbus.
Separately, Beijing retaliated against Mr Trump’s decision to sign legislation supporting protesters in Hong Kong by barring US navy ships from visiting the territory and slapping sanctions on four non-governmental organisations. Mr Trump admitted that signing the legislation did not increase the chances of agreeing a so-called “phase one” trade deal.
“The US’s show of force on tariffs is as much a message to China as it is to the countries which are affected. It says: ‘tariffs are still a weapon we can use if you don’t sign a deal’,” said Robert Carnell, an economist with ING.
The dollar index, a measure of the greenback against a basket of peers, was hovering at its lowest level in almost two weeks. The yield on the 10-year US Treasury, which moves inverse to price, was flat at 1.819 per cent.