BENGALURU: Emerging Asian currencies and shares tumbled on Monday after US President Donald Trump slapped tariffs on imports from the country’s three biggest trade partners, stoking fears of a trade war and its impact on export-focused economies in the region.
Markets were downbeat in Asia, with stocks reliant on exports getting hit the most, ranging from Japanese automakers to chipmakers in Taiwan, South Korea, to Chinese e-commerce firms.
As Trump had promised last month, the United States hit Canada and Mexico with duties of 25% and China with a 10% levy, with retaliatory moves immediately promised by Canada and Mexico, the top two US trading partners. China said it would challenge Trump’s levies at the World Trade Organization.
The reality of a trade war sent the Mexican peso to its lowest in nearly three years, the Canadian dollar to a 22-year low and offshore yuan to a record low.
All currencies in Asia slumped, with the Thai baht and Indonesian rupiah among the top losers.
“In the weeks ahead, tariffs are likely to represent an overhang on markets and contribute to volatility, at least until investors gain greater clarity on the path and destination of US trade policy,” UBS analysts said.
Markets in Taipei fell 3.5% while Seoul was 2.5% lower, weighed down by exporters.
Bangkok stocks traded around an over-five-year low.
Shares in Jakarta lost 2.2% in its weakest trading session in six months. Heavyweight coal miner Adaro Andalan and Adaro Minerals fell 4.5% and 8% each, dragging the local benchmark.
Indonesia, Southeast Asia’s largest economy, reported annual inflation below the central bank’s target range, a sign that a surprise policy easing last month boosted spending and bolstered the case for another rate cut. The rupiah was trading 0.9% lower against the greenback.
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