Asian stocks tumbled on Monday (2 June) following US President Donald Trump’s announcement of a sharp hike in steel and aluminium tariffs, intensifying trade tensions with China and rattling investor confidence across the region.
Trump declared last week that tariffs on steel and aluminium imports would double to 50 per cent, claiming the move was necessary to further protect the US steel industry, reported TOI.
He also accused China of “totally violating” a trade truce struck last month to pause new tariffs for 90 days while broader negotiations took place.
US Commerce Secretary Howard Lutnick exacerbated the situation, stating on Fox News that China was “slow-rolling” the agreement.
Beijing swiftly rejected the allegations, labelling them baseless and “seriously contrary to the facts.” Chinese officials also criticised Washington for making “bogus charges and unreasonably accused China of violating the consensus.”
The developments have reignited fears of a prolonged trade war, overshadowing otherwise positive US economic indicators.
Hong Kong’s Hang Seng Index dropped more than 2 per cent, with property firms suffering sharp losses, particularly New World Development, which is grappling with over $11 billion in refinancing requirements.
Broader concerns over China’s property sector weighed heavily on sentiment. Markets in Tokyo, Sydney, Singapore, Taipei, Manila and Jakarta also registered losses. Shanghai was closed for a public holiday.
Oil prices spiked after OPEC announced a smaller-than-expected production increase for July. Simultaneously, geopolitical fears rose following drone strikes by Ukraine on Russian air bases.
Meanwhile, the US dollar weakened as domestic concerns mounted. Critics have warned that Trump’s push for extended tax cuts and welfare reductions could significantly deepen the federal deficit.
Credit agency Moody’s downgraded the US’s final top-tier credit rating, while JPMorgan CEO Jamie Dimon cautioned of a looming crisis in the bond market, saying, “The bond market is going to have a tough time… I don’t know if it’s six months or six years.”