SINGAPORE: Asian stocks fell on Friday with heavy selling in South Korea and Japan while safe-haven gold hit a record high as the latest tariff salvo from US President Donald Trump stoked investor worries of an all-out trade war.
Trump moved ahead with a 25% tariff on auto imports due to kick in next week, drawing fierce criticism from politicians and industry executives across the globe and a warning from global car makers that price hikes were likely on the way.
The widening of the global trade war that Trump kicked off upon regaining the White House has jolted the markets, with shares of global automakers hit particularly hard.
In Asia, Japan’s Nikkei fell more than 2% led by sharp drop in Toyota and Honda.
South Korea’s benchmark index touched a two-week low and was last down 1.3%.
The auto industry is a pillar of both countries’ economies. Hong Kong’s Hang Seng index was 0.6% higher, largely shrugging off the auto tariff threat.
Trump said he would be willing to reduce tariffs on China to get a deal done with TikTok’s Chinese parent ByteDance to sell the popular app.
“US tariffs on auto imports do not come as a huge surprise, having been flagged for some time,” said Fred Neumann, chief Asia economist at HSBC.
“To some extent, producers can shift supply chains and production locations to mitigate these effects. At the same, they may also be able to pass some of the price increases to US consumers, given that tariffs affect nearly all producers.”
Some automakers, including Volvo Cars, Volkswagen’s Audi, Mercedes-Benz and Hyundai, have already said they will relocate portions of their production.
Stocks skid, dollar nears 3-week top as Trump announces auto tariffs
Ferrari, which makes all of its cars in Italy, said it would raise prices up to 10% on some models.
The focus is now on reciprocal tariffs the US is due to announce on April 2.
Trump indicated the measures may not be the like-for-like levies he has been pledging to impose.
“Not surprisingly, the tariff talk is resulting in another round of risk-off … as traders try to ascertain the implications, but generally conclude that tariffs will be both growth-restraining and inflation-producing,” said Thierry Wizman, global FX & rates strategist at Macquarie.
In the currency markets, the dollar was headed for a quarterly drop as worries about the impact of tariffs on US growth weighed. The euro was steady at $1.07942, on course for a 4% rise in the January-March period.
The yen was slightly stronger at 150.76 per dollar in early trading, on course for a nearly 4% gain against the greenback in the quarter as traders bet on the Bank of Japan hiking interest rates again.
Data on Friday showed core consumer inflation in Tokyo accelerated in March, remaining above the central bank’s target on steady gains in food costs.
That kept alive market expectations of a near-term rate hike.
DBS strategists expect near-term consolidation for the yen, which they believe is caught between trade risks and firming inflation.
In commodities, gold prices scaled a record peak on Friday as the threat of trade wars drives a rush towards the safe-haven metal.
Spot gold was last up 0.58% at $3,073.31 per ounce.
Gold is up more than 17% in the first quarter of the year, heading for its best quarterly performance since 1986.
Oil prices were steady as traders assessed a tightening of crude supplies along with new US tariffs and their expected effect on the world’s economy.
Brent crude futures were 0.07% lower at $73.98 a barrel.
US West Texas Intermediate crude futures were 0.07% lower at $69.87.
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