A historic sell-off hit Asia-Pacific markets as sweeping US tariffs spark fears of global recession
Stock markets across the Asia-Pacific region saw one of their steepest crashes in decades this week, as investors reacted to US President Donald Trump’s sweeping new tariffs targeting virtually all US trading partners. From Shanghai to Seoul and Hong Kong to Sydney, regional indexes tumbled in a brutal start to the week.
The Shanghai Composite Index dropped by 7.3%, while Hong Kong’s Hang Seng Index plummeted by 13.2%—its largest single-day fall since 2008. Japan’s Nikkei 225 fell 7.8%, and Taiwan’s Weighted Index plunged nearly 10%, marking a record-breaking collapse.
“This is a bloodbath,” one analyst told the BBC. “Markets are reeling as the world stares down a full-blown trade war.”
Trump’s Tariff Bombshell
The market chaos followed Trump’s announcement of new import tariffs ranging from 10% to 54% on goods from nearly every US trade partner. While a blanket 10% tariff has already gone into effect for countries like Australia, Singapore, and New Zealand, other nations are being hit with significantly higher rates.
Key US allies and export hubs in Asia—Japan (26%), South Korea, Vietnam (46%), Thailand (36%), and China (54%)—are among the hardest hit. Bangladesh, which exports over $8 billion in garments to the US annually, faces a 37% tariff. Trump has labeled some of these nations as “major trade offenders.”
Ripple Effects in Europe and Wall Street
Europe wasn’t spared. London’s FTSE 100 fell by nearly 5%, while stock markets in France and Germany also posted steep losses. In the US, the S&P 500 tumbled nearly 6% to cap its worst week since 2020. Goldman Sachs has now raised its forecast of a US recession within the next 12 months to 45%, up from 35%. JPMorgan has gone further, warning of a 60% chance of a global downturn.
“Tariffs are triggering fears of both inflation and recession,” said Julia Lee from FTSE Russell. “This is weighing heavily on investor confidence across all major economies.”
Asia’s Economic Vulnerability
Asia’s export-driven economies are particularly vulnerable to this trade shock. Countries like Vietnam and Bangladesh, which serve as key manufacturing bases for US giants like Nike and Gap, face mounting uncertainty. China, the region’s largest economy, has retaliated with its own tariffs, intensifying the standoff and deepening market volatility.
“This is a structural shift,” said Qian Wang, Chief Economist for Asia Pacific at Vanguard. “A new era of high tariffs appears to be setting in—and Asia is at the epicenter.”
Investors Brace for Prolonged Turmoil
The current sell-off was further exacerbated by delayed reactions in mainland China, Hong Kong, and Taiwan due to public holidays, leading to a dramatic catch-up selloff on Monday. Global stock markets have now lost trillions of dollars in value since Trump’s tariff bombshell.
According to Frank Lavin, former US Undersecretary for International Trade, “Asia will feel a disproportionate impact because it sends more goods to the US than any other region. This is a major reset for global trade.”
As US futures continue to fall, market watchers warn that the worst may not be over. With the White House showing no signs of backing down and Asian countries scrambling to respond, investors are preparing for continued volatility in the weeks ahead.
