European futures also down more than 3% after Trump indicates tariffs will \u2018definitely happen\u2019 in EU countries<\/p>\n\n\n\n
Asian sharemarkets tumbled in early trade on Monday after the Trump administration\u2019s imposition of tariffs on Mexico, Canada and China<\/a> sparked fears of an escalating global trade war.<\/p>\n\n\n\n Taiwan\u2019s Taiex fell 4.4% at the open, led by a more than 6% plunge in semiconductor heavyweight TSMC. Japan\u2019s Topix index was down as much as 2.3% and Korea\u2019s Kospi fell as much as 2.4%, led by major exporters with exposure to global markets, including Canada<\/a> and Mexico such as electronics manufacturers Samsung and LG, and automaker Kia. China\u2019s sharemarkets remain closed for the lunar new year holidays.<\/p>\n\n\n\n Australia\u2019s benchmark ASX 200 opened down more than 2%, retreating from a fresh record high reached on Friday. Iron ore miners, including BHP and Rio Tinto, followed the price of the commodity lower. Hong Kong\u2019s Hang Seng index opened down 0.9%.<\/p>\n\n\n\n European futures were also down sharply, as much as 3.4%, after Donald Trump indicated at a press conference that European Union<\/a> member countries would be next in the firing line. The euro plunged as much as 2.3% to $1.0125.<\/p>\n\n\n\n \u201cWe\u2019ll see what happens,\u201d the US president replied when asked by reporters what countries would be next to be targeted by tariffs. \u201cIt will definitely happen with the European Union, I can tell you that.\u201d<\/p>\n\n\n\n The US dollar shot to a record high against the Chinese yuan in offshore trading, and jumped to the highest since 2003 against Canada\u2019s currency and the strongest since 2022 versus Mexico\u2019s peso.<\/p>\n\n\n\n Trump on Saturday followed through with his promise to place 25% tariffs on Canada and Mexico \u2013 except for Canadian energy which will attract a 10% tariff \u2013 as well as 10% tariffs on China<\/a>, in retaliation over immigrants and illegal drugs that he says enter the US from those countries. The White House said the tariffs would go into effect on Tuesday.<\/p>\n\n\n\n It has already sparked retaliation<\/a> from all three targeted countries. Canada\u2019s department of finance has published a list<\/a> of US products imported into Canada that it will target with a 25% retaliatory tariff, also starting on Tuesday. Claudia Sheinbaum, Mexico\u2019s president, has also vowed to implement retaliatory tariffs but also said her government was working on a \u201cplan B\u201d as she insisted that Mexico \u201cdoesn\u2019t want confrontation\u201d.<\/p>\n\n\n\n China said it would file a lawsuit against the tariffs. The imposition of tariffs by the US \u201cseriously violates\u201d World Trade Organization (WTO) rules, China\u2019s commerce ministry said in a statement, urging the US to \u201cengage in frank dialogue and strengthen cooperation\u201d.<\/p>\n\n\n\n Trump\u2019s move was the first strike in what could usher in a destructive global trade war and drive a surge in US inflation that would \u201ccome even faster and be larger than we initially expected\u201d, said Paul Ashworth of Capital Economics<\/a>.<\/p>\n\n\n\n Barclays strategists previously estimated that the US tariffs could create a 2.8% drag on S&P 500 company earnings, including the projected fallout from retaliatory measures from the targeted countries.<\/p>\n\n\n\n \u201cDuring Trump\u2019s first term in office, tariffs and trade tensions brought attention to the more general topic of the advantages but also disadvantages of globalisation,\u201d said ING analysts led by Inga Fechner. \u201cThis time around, it is hard to see how an escalation of trade tensions can do any good, to anyone.\u201d<\/p>\n\n\n\n