Asian markets plunge as Trump’s trade war escalates

Asian shares tumbled on Monday after US President Donald Trump imposed tariffs on Canada, Mexico, and China, escalating trade tensions.

Investors fear a potential trade war that could hurt major companies and slow global economic growth.

In response, Canada and Mexico have announced retaliatory tariffs, while China has vowed to take “corresponding countermeasures” and challenge Trump’s decision at the World Trade Organization.

Trump defended the tariffs, claiming they are necessary to curb illegal drugs and immigration into the US.

The impact on markets was immediate—Hong Kong’s Hang Seng Index dropped 0.7%, Japan’s Nikkei 225 fell 2.8%, South Korea’s Kospi plummeted 3%, and Australia’s ASX 200 declined 1.9%.

Markets in mainland China remained closed due to the Lunar New Year holiday.

The US dollar surged to a record high against China’s yuan, while the Canadian dollar fell to its lowest level since 2003.

“Investors are pulling back from risk due to fears of a prolonged trade dispute between the world’s two largest economies,” said Tim Waterer, chief market analyst at KCM Trade.

Analysts are also concerned about which countries Trump might target next, as he has hinted at imposing tariffs on the European Union “pretty soon.”

Charu Chanana, chief investment strategist at Saxo Bank, warned that while tariffs may offer short-term benefits to the US, they could ultimately weaken the dollar’s global dominance by encouraging other countries to reduce reliance on the US.

Trump has announced plans to speak with Canada and Mexico’s leaders on Monday before the tariffs take effect at midnight on Tuesday.

Under the new policy, Canada and Mexico will face a 25% tariff on their exports to the US, while Chinese goods will be hit with an additional 10% tax.

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