HONG KONG: US President Donald Trump’s controversial decision to slap tariffs on steel and aluminum imports sent Asian stocks plunging on Friday as the move fuelled fresh fears of a global trade war.
Traders, already on edge owing to worries about rising interest rates, followed their US counterparts in heading to the hills after the president imposed levies on the commodities as part of his “America First” policy.
The news, which was even opposed by elements inside the White House, was met with anger from key allies including the EU and Canada. China has previously warned it would be forced to act should Trump push through such measures.
The tycoon had campaigned on a protectionist platform, saying the US was being taken advantage of by other countries, and promised to throw up barriers to protect jobs at home.
And analysts said there could be more to come.
“With the elevation of (trade hawk) Peter Navarro this week traders, markets, and business leaders are likely going to have to get used to these types of views continuing to shape policy,” Greg McKenna, chief market strategist at AxiTrader, said in a note.
Navarro, a trade hawk and presidential aide, was by Trump’s side as he made his remarks.
Wall Street’s three main indexes ended sharply down for a third day, and those losses filtered through to Asia, where Tokyo ended 2.5 percent down while Hong Kong sank 1.5 percent and Seoul was one percent off.
Shanghai shed 0.6 percent, while Sydney and Singapore each gave up 0.8 percent.
Wellington, Manila, Taipei and Jakarta were also well down.
Aluminum and steel firms took a hit across the region, while firms that use the products — such as electronics and auto makers — were also much lower.
“Traders are selling pinpointed steelmakers and automakers today in the wake of the remarks by Trump, at a time when sentiment has been hit by worries over US interest rates,” Hikaru Sato, senior technical analyst at the investment strategy section at Daiwa Securities, told AFP.
However, he added: “But the selling pressure on them may not drag for a long time as the impact of Trump remarks in general are often short-lived.”
Japanese giant Toyota warned the car sector would be hurt and the measures would “substantially” increase the price of cars sold in America
The announcement overshadowed a second day of congressional testimony by new Federal Reserve boss Jerome Powell, who struck a softer tone than Tuesday, when his championing of the US economy fanned expectations of sharp rate hikes.
Appearing before lawmakers Thursday, he emphasised future interest rates would be gradual and allow the economy to expand.