Stocks in Asia slid lower on Monday morning, days after President Trump threatened to impose higher tariffs on all Chinese imports and cancel a planned meeting with China’s leader, Xi Jinping.
Benchmark indexes in Taiwan and Hong Kong dropped around 2 percent in early trading on Monday. South Korea’s Kospi index and Shanghai’s composite index both fell about 1 percent.
Markets in Japan were closed for a holiday, but its Nikkei futures index had fallen around 5 percent on Friday before paring back some of those losses.
The shaky trading in Asia followed drops in U.S. stocks on Friday after Mr. Trump posted on social media that he was considering a “massive increase in tariffs” on Chinese products. The sell-off in the United States was pronounced enough to wipe out the S&P 500’s prior weekly gains.
After the U.S. market closed, Mr. Trump elaborated on his comments, saying that the United States would impose a 100-percent tariff on Chinese products starting on Nov. 1, along with export controls on “any and all critical software.”
Mr. Trump was responding to China’s announcement that it would curb exports of some rare-earth minerals needed to make high-tech products including semiconductors, electric vehicles and jet fighters.
Over the weekend, Mr. Trump struck a more diplomatic tone, saying on social media that the United States did not want to “hurt” China, adding that “it will all be fine!” U.S. stocks appeared to steady, with S&P 500 futures bouncing back about 1.3 percent.
Stocks in Asia had, for the most part, recovered since April, when the United States and China announced that they would impose tariffs of more than 100 percent on each others’ goods and markets plunged. They agreed in May to temporarily slash the tariffs, and investors took that move as a sign that their trade conflict was easing.
Beijing’s trade curbs and Mr. Trump’s tariff threats show how quickly calm can give way to confrontation between the world’s two largest economies.
The latest developments “raise the possibility that the two countries could once again enter into a trade war,” said Takahide Kiuchi, the executive economist at the Tokyo-based Nomura Research Institute. “If this were to happen, the impact on the global economy would be severe,” he said.
River Akira Davis covers Japan for The Times, including its economy and businesses, and is based in Tokyo.
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