^{Source: The Guardian}

Asia-Pacific markets took a sharp dive on Thursday following U.S. President Donald Trump’s latest announcement of sweeping reciprocal tariffs, targeting over 180 countries and territories, many of which are in the region. The move has rattled investor sentiment, fueling fears of a deepening trade war and its potential ramifications for global economic growth.

Breaking Down the Tariffs: Who’s Affected the Most?

In a series of social media posts, the White House outlined the tariff rates it claims other nations impose on U.S. goods through mechanisms like currency manipulation and trade barriers. Under the new measures:

• China’s tariff rate will rise to a staggering 54%, up from the already steep 20%.
• India, South Korea, and Australia will face tariffs of 26%, 25%, and 10%, respectively.

Chris Kushlis, Chief Emerging Markets Macro Strategist at T. Rowe Price, noted that these tariff hikes significantly exceed market expectations and could serve as a major drag on Asian exports.

“The U.S. accounts for about 15% of total exports from the Asia-Pacific region, meaning a tariff hike between 20% and 35% could substantially hamper economic growth in export-heavy economies,” Kushlis explained.

Market Fallout: How Stock Indexes Reacted

The announcement triggered widespread market losses across Asia:

• Japan’s Nikkei 225 tumbled over 4% intraday before closing 2.77% lower at 34,735.93.
• South Korea’s Kospi pared some losses but still ended 0.76% down at 2,486.70, while the smaller Kosdaq index dropped 0.2% to 683.49.
• China’s CSI 300 slid 0.59% to 3,861.50, with Hong Kong’s Hang Seng Index falling 1.52% to 22,849.81.
• India’s Nifty 50 and BSE Sensex saw 0.26% and 0.36% declines, respectively, by mid-afternoon trading.
• Australia’s S&P/ASX 200 fell 0.94% to 7,859.70, reflecting investor anxiety.

Gold surged as investors sought safe-haven assets, reaching a record-high $3,130.19 per ounce by 4:20 p.m. Singapore time.

The Bigger Picture: Economic and Consumer Impacts

Stephen Dover, Chief Market Strategist at Franklin Templeton, highlighted an intriguing detail: China, despite its massive trade deficit with the U.S., doesn’t face the highest reciprocal tariffs. Instead, Southeast Asian nations, which have previously benefited from tariffs imposed on China, are now among the hardest hit.

Dover also warned that these tariffs could have far-reaching consequences for the U.S. economy. Households may see annual expenses rise by as much as $4,200, assuming an average tariff rate of 20% on imports. This could dampen both consumer and business spending, increasing the risk of slower U.S. growth and corporate earnings disappointments in 2025.

Wall Street’s Response and Global Market Sentiment

Despite the turbulence in Asia, U.S. stock markets showed resilience, closing higher after a volatile session:

• The S&P 500 rose 0.67% to 5,670.97.
• The Nasdaq Composite gained 0.87%, ending at 17,601.05.
• The Dow Jones Industrial Average climbed 235.36 points (0.56%) to 42,225.32.
• Tesla shares jumped 5.3% amid reports that Trump signaled Elon Musk may step back from a direct role in White House advisory discussions.

Looking Ahead: What’s Next for Global Trade?

Analysts warn that escalating trade tensions could further destabilize global markets. Investors will be closely watching how Asian economies respond, whether they retaliate with counter-tariffs, and how the U.S. administration navigates trade policy heading into 2025.

For now, volatility is expected to persist, with traders bracing for further market swings as geopolitical and economic uncertainty looms large.

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