Asian stock markets and US futures fell sharply on Thursday following US President Donald Trump's announcement of substantial tariff increases on imports.

Japan’s Nikkei 225 index dropped more than 3.4 per cent before recovering slightly to close at 2.9 per cent lower at 34,699.52. Trump imposed a 24 per cent "reciprocal tariff" on Japan, one of the United States' key allies.

South Korea also faced a 25 per cent tariff, leading its benchmark Kospi to slump 1.9 per cent to 2,459.30.

In Australia, the S&P/ASX 200 fell 1.8 per cent to 7,793.10.

US markets react to tariffs
The S&P 500 futures dropped 3 per cent, while Dow Jones Industrial Average futures fell 2 per cent, signalling potential losses when US markets reopen.

On Wednesday, before the announcement, US stocks fluctuated significantly. The S&P 500 ended 0.7 per cent higher at 5,670.97 after an early 1.1 per cent loss. The Dow Jones rose 0.6 per cent to 42,225.32, and the Nasdaq composite climbed 0.9 per cent to 17,601.05.

Tesla’s stock saw a volatile session, initially plunging over 6 per cent on reports of lower first-quarter vehicle deliveries before closing 5.3 per cent higher. Newsmax shares plummeted 77.5 per cent, reversing some of the dramatic gains from earlier in the week.

Impact of trade war on global markets
Trump’s tariffs aim to "make the global system fair" and bring manufacturing jobs back to the US. However, analysts warn that the measures could slow economic growth and worsen inflation.

After markets closed, Trump announced a 10 per cent baseline import tax on all countries and higher rates on nations with trade surpluses. The tariffs include:

  • China – 34 per cent
  • European Union – 20 per cent
  • Taiwan – 32 per cent

Trump also confirmed 25 per cent tariffs on auto imports, extended levies on steel and aluminium, and planned new taxes on pharmaceuticals, lumber, copper, and computer chips.

Bond and currency markets react
Treasury yields fluctuated, reflecting market uncertainty. The 10-year Treasury yield dropped to 4.11 per cent before rising to 4.18 per cent.

In commodities, US crude oil prices plunged USD 2.08 to USD 69.63 per barrel, while Brent crude fell USD 2.06 to USD 72.89 per barrel.

The dollar weakened against the yen, falling to 148.07 from 149.28, while the euro strengthened to USD 1.0897 from USD 1.0855.

With AP inputs