Asian stock markets nosedived on Monday as China unveiled a fresh wave of retaliatory tariffs against the United States, deepening a high-stakes trade war that has sent shockwaves through global financial markets.
Global investors hit the panic button, resulting in one of the worst single-day equity selloffs since the COVID-19 pandemic. The Hang Seng Index in Hong Kong plunged over 10%, Tokyo’s Nikkei 225 shed more than 6%, while Taipei lost over 9%. The Shanghai Composite Index dropped more than 6%, and markets across Singapore, Seoul, Sydney, Manila, Wellington, and Mumbai followed suit, closing deep in the red.
Wall Street futures also slumped, while fears over shrinking demand drove oil and commodity prices sharply lower.
China Responds With Retaliatory Tariffs And Export Controls
The market turmoil followed China’s announcement late Friday of a 34% retaliatory tariff on all U.S. imports, effective April 10. In a move seen as escalating tensions further, Beijing also imposed export controls on seven critical rare earth elements, including gadolinium—used in MRI machines—and yttrium, essential for consumer electronics production.
Trump Holds Firm Amid Market Chaos
U.S. President Donald Trump, who triggered the market slide last week with sweeping new tariffs, showed no signs of backing down despite the global fallout.
He insisted on Sunday, “Sometimes you have to take medicine to fix something,” dismissing concerns about engineered market volatility. Trump reiterated he would not cut deals with any country unless trade deficits were addressed.
No Safe Haven As Markets Tank
All sectors were impacted in the mass sell-off—tech stocks, automakers, banks, energy firms, and casinos all suffered heavy losses. Tech giants bore the brunt, with Alibaba sinking over 14%, JD.com down 13%, and Japan’s SoftBank dropping more than 10%. Sony shares fell 9.6%.
South Korea triggered a sidecar mechanism—a temporary halt in trading—for the first time in eight months as the KOSPI fell over 5%.
Experts Warn Of Recession Risks
“This could lead to a recession in the U.S. very quickly, possibly lasting through the year or longer,” said Steve Cochrane, Chief Asia-Pacific Economist at Moody’s Analytics. “And if that happens, China’s exports will take an even harder hit.”
Oil prices also reacted sharply, with West Texas Intermediate (WTI) and Brent Crude both down over 2.7% on Monday. That followed Friday’s steep 7% decline, pushing prices to their lowest levels since 2021.
Copper, a key material for renewable energy and electric vehicles, continued its downward slide.
“The market is in free-fall mode again, punching through floors,” said Stephen Innes, managing partner at SPI Asset Management. “Trump’s team isn’t blinking. The tariffs are being treated as a victory lap, not a bargaining chip.”
U.S. Fed Caught In A Bind
Markets were already reeling after U.S. Federal Reserve Chair Jerome Powell warned on Friday that the new tariffs could fuel inflation, slow economic growth, and increase the risk of higher unemployment.
“Powell’s hands are tied,” Innes added. “He’s acknowledged the obvious — that tariffs are inflationary and recessionary — but he’s not signalling a rescue.”
A Dangerous Game
“Traders are nervously watching the two biggest economies going toe to toe on tariffs,” said Tim Waterer, Chief Market Analyst at KCM Trade. “Neither the US nor China are backing down, and in this kind of escalatory environment, risk assets are being avoided like the plague.”