Asian stock markets saw significant declines on Friday, driven by heavy selling in South Korea and Japan, as fears of an escalating trade war loomed following U.S. President Donald Trump’s decision to impose a 25% tariff on auto imports. The tariffs, set to take effect next week, have drawn global criticism, with automakers warning of potential price hikes. This move exacerbates the trade tensions that Trump reignited after taking office, with the auto industry in both Japan and South Korea bearing the brunt of the market’s reaction.
The latest tariff announcement sent Japan’s Nikkei down by more than 2%, with automakers like Toyota and Honda experiencing significant drops. South Korea’s benchmark index also hit a two-week low, falling by 1.3%. While Hong Kong’s Hang Seng index showed some resilience, increasing by 0.6%, the broader market remained on edge. Global carmakers such as Volvo, Volkswagen, and Hyundai have already taken steps to relocate production to mitigate the effects of the new tariffs.
As markets weigh the potential economic consequences, traders are particularly focused on the reciprocal tariffs the U.S. plans to announce on April 2. Experts, including HSBC’s Fred Neumann, suggest that while the tariffs were expected, the broader implications for economic growth and inflation remain uncertain. Some automakers have indicated price hikes, with Ferrari already announcing increases of up to 10% on certain models, while others may adjust their supply chains in response.
Meanwhile, gold prices surged to a record high of $3,073.31 per ounce, reflecting investor flight to safety amid mounting trade tensions. This spike in gold prices marks a 17% increase in the first quarter, setting the stage for the best quarterly performance since 1986. Currency markets also saw shifts, with the U.S. dollar facing downward pressure, while the yen gained strength, driven by expectations of potential interest rate hikes from the Bank of Japan. Oil prices remained stable, with traders cautious about the effects of the tariffs on global economic growth and energy demand.
Source: Reuters