Asian stock markets plunged on Monday as the economic shock from sweeping new U.S. tariffs sent tremors across global financial markets. Investors across the region reacted with alarm, fearing that an escalating trade war could tip the world’s largest economy into a recession — with serious fallout for export-driven nations in Asia.
Markets in Tokyo, Shanghai, Hong Kong, and Sydney opened sharply lower, with widespread losses wiping out billions in market value. “It’s a bloodbath out there,” remarked one analyst, reflecting the scale of the rout.
By midday, Japan’s Nikkei 225 had shed 6%, Australia’s ASX 200 was down 4%, and South Korea’s Kospi fell 4.7%. Mainland China, Hong Kong, and Taiwan saw even sharper declines, as investors returned from public holidays and reacted to last Friday’s global downturn. The Shanghai Composite dropped more than 6%, while the Hang Seng and Taiwan Weighted Index plunged by around 10%.
The market chaos follows a fresh round of tariffs announced by President Donald Trump, including sweeping 10% duties on goods from a wide range of countries, with some targeted rates as high as 46%. The tariffs hit key trading partners like China, the European Union, Vietnam, and Bangladesh especially hard.
“Tariffs are stoking concerns about inflation and the real risk of a U.S. recession,” said Julia Lee of FTSE Russell. “The knock-on effects for global markets, especially in Asia, are becoming harder to ignore.”
Wall Street has taken notice. Goldman Sachs raised the probability of a U.S. recession in the next 12 months to 45%, up from 35%, citing weaker growth prospects. JPMorgan went further, projecting a 60% chance of both a U.S. and global recession.
The stakes are high for Asia, where economies depend heavily on exports to the U.S. “Asia is bearing the brunt of these tariff hikes,” said Qian Wang, Chief Economist for Asia Pacific at Vanguard. “Smaller, open economies will face both short- and long-term challenges.”
Vietnam and Bangladesh are among the most exposed. The U.S. imposed new tariffs of 46% on Vietnamese goods and 37% on imports from Bangladesh — two key apparel suppliers to American brands like Nike and Lululemon. According to the Bangladesh Garment Manufacturers and Exporters Association, the country ships $8.4 billion in garments to the U.S. each year.
“Asia’s heavy reliance on U.S. markets makes it particularly vulnerable,” said Frank Lavin, a former U.S. Undersecretary for International Trade. “The region is feeling the sharp end of the trade dispute.”
Markets in the U.S. also closed last week with heavy losses after China responded with its own tariff measures. The S&P 500 slumped nearly 6%, while the Dow and Nasdaq also dropped more than 5%, marking the worst week for U.S. stocks since 2020. European markets were dragged down as well, with the FTSE 100 falling almost 5% — its steepest drop in five years — and similar declines seen in Germany and France.
With U.S. futures pointing to another tough session, investors around the world remain on edge. “There’s no clear end in sight to this tariff war,” Lee warned. “Markets are bracing for more pain.”
Since the U.S. announced its sweeping trade measures, global equities have lost trillions in value — underscoring the far-reaching economic risks of protectionism in an interconnected world.