Asian stocks drop after Trump proposes new tariffs

Trump’s previous comments on imposing tariffs without specific details have been met with skepticism by some investors who see it as a “bargaining tactic.”

Most Asian equities slipped in early trade as the threat of a broader global trade war and geopolitical uncertainty outweighed a rally in chipmakers that drove the S&P 500 to a record.

Shares in Hong Kong and mainland China fell at the open, joining losses in Australia. Stocks in Japan dropped with automakers Toyota Motor Corp. and Honda Motor Co. declining after President Donald Trump threatened to impose tariffs on automobile, semiconductor and pharmaceutical imports of around 25%. The dollar gained versus most of its major peers.

Trump’s previous comments on imposing tariffs without specific details have been met with skepticism by some investors who see it as a “bargaining tactic.” While investors remain cautious on the tariff front and talks to end the war in Ukraine, in Asia, the focus is on whether a $1 trillion rally in Chinese stocks will be sustained. Advances in artificial intelligence by DeepSeek and President Xi Jinping’s meeting with tech companies have encouraged investors.

“After such a run, selling on the open won’t necessarily surprise, and we see clear buying exhaustion in the trend,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note. “That said, there is a change in sentiment towards China’s asset markets underway, and this rally is fully justified, and where pullbacks should be shallow.”

Shares in Baidu Inc. declined as much as 7.3% in Hong Kong after the company announced a drop in revenue. In Australia, National Australia Bank Ltd. slid more than 8% on a drop in earnings.

Trump’s announcement of the new duties, expected to come as soon as April 2, would widen the president’s trade war if implemented. His previously announced 25% tariffs on steel and aluminum are set to come in March. Tuesday’s comments are his most detailed yet in specifying other sectors that would be hit with fresh barriers.

“I probably will tell you that on April 2, but it’ll be in the neighborhood of 25%,” Trump told reporters Tuesday at his Mar-a-Lago club when asked about auto tariffs. On the drug imports, he said: “It’ll be 25% and higher, and it’ll go very substantially higher over a course of a year.”

Japan’s exports rose at a faster clip. The yen rose after the BOJ released text of board member Hajime Takata’s speech.

Elsewhere in Asia, the New Zealand dollar weakened after the RBNZ cut interest rates by 50 basis points for the third straight meeting to help revive the ailing economy and signaled more easing in coming quarters.

On the geopolitical front, top officials from the US and Russia met for a first round of talks over the war in Ukraine and raised the possibility of broader cooperation. Secretary of State Marco Rubio told European allies that the US will keep sanctions on Russia in place at least until a deal to end the Ukraine conflict is reached.

In the US, Federal Reserve Bank of San Francisco President Mary Daly said policy needs to remain restrictive until there’s more progress on inflation, which she expects will continue declining over time.

In other markets, oil held advances on the possible postponement of OPEC+ supply increases and uncertainty around flows from Russia. Gold surged 1.4%, close to a new record high.