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Donald Trump has imposed a swath of tariffs on Canada, Mexico and China, sparking an immediate retaliation from Beijing and sending stocks lower as fear mount over a global trade war.
A 25 per cent tariff on imports from Canada and Mexico went into effect on Tuesday alongside an additional 10 per cent levy on Chinese imports.
The tariffs on China come on top of a previous 10 per cent levy that Trump imposed on Chinese imports last month.
The US president has said the moves are a response to the countriesโ failure to clamp down on the trafficking of the deadly opioid fentanyl.
On Tuesday, China said it would hit back with a 10-15 per cent tariff on US agricultural goods ranging from soyabeans and beef to corn and wheat. Canada earlier vowed retaliation with a similar tariff against $30bn of US imports.
The tariffs against Americaโs three largest trading partners raised duties to some of the highest levels in decades.
Hong Kongโs Hang Seng index and mainland Chinaโs CSI 300 benchmark fell as much as 2 per cent and 0.8 per cent respectively before recovering to trade flat. Japanโs exporter-heavy Nikkei 225 slid 1.2 per cent, while Australiaโs S&P/ASX 200 retreated 0.6 per cent.
Overnight on Wall Street, the S&P 500 closed almost 2 per cent lower and the Nasdaq Composite fell 2.6 per cent after Trump said the tariffs would go into effect.
โEquities are taking a leaf from the US moves overnightโ on Monday, said Mitul Kotecha, head of emerging markets macro and FX strategy at Barclays. โWe had some pretty sharp moves in US stocks, so I think this is a reaction to that. If the US slows itโs obviously not good for the rest of the world.โ
The dollar fell 0.2 per cent against a basket of currencies including the euro, yen and pound on Tuesday, after falling 0.8 per cent on Monday.
โI think the message generally is that risk assets are taking a bit of a beating,โ said Kotecha, adding that weak US economic data was leading to concerns about a slowdown in the worldโs largest economy.
Trump said at the White House on Monday afternoon that there was โno roomโ for last-minute negotiation with Canada and Mexico. โThe tariffs, you know, theyโre all set. They go into effect tomorrow,โ he said.
The North American levies are set at 25 per cent except for Canadian oil and energy products, which will face a 10 per cent tariff. Canada accounts for about 60 per cent of US crude imports.
Chinaโs response also targeted US companies, with Beijing on Tuesday placing 10 American companies on a national security blacklist and slapping export controls on 15 others.
It also banned US biotech company Illumina from exporting its gene-sequencing equipment to China. Beijing had added Illumina to its โunreliable entitiesโ list last month in response to Trumpโs initial barrage of tariffs.
Chinaโs commerce ministry earlier hit back at the US justification of the tariffs over fentanyl flows, saying that the claim โdisregards facts, international trade rules and the voices of all parties, and is a typical act of unilateralism and bullyingโ.
Chinaโs foreign ministry also threatened to withdraw co-operation with the US on drug controls, which resumed under Joe Bidenโs administration.
โIf the US continues to use the fentanyl issue to pressure, blackmail, coerce and threaten China, it will only be counter-productive and deal a blow to the dialogue and co-operation between China and the US in the field of drug control,โ the foreign ministry said.
