Asian stock markets plunge as Trump defends tariffs

Stock markets in Asia tumbled overnight, and Wall Street is bracing for more significant declines as global investors react to the ongoing impact of US President Donald Trump's tariff measures, now entering their second week.

Markets across Asia were sharply down following Trump’s firm stance that he won’t ease the sweeping import tariffs unless countries rebalance their trade relationships with the US.

In Japan, the Nikkei 225 index, which tracks major listed firms, fell around 6.5% on Monday morning, nearing its lowest point since August last year.

China's Shanghai Composite index dropped over 8%, while Hong Kong's Hang Seng index saw an even steeper plunge, falling by more than 12%.

This turmoil follows a significant drop in the UK’s FTSE 100 on Friday—its largest single-day loss since the beginning of the COVID-19 crisis. Global financial markets appeared poised for another wave of heavy losses.

The US S&P 500 and Dow Jones indexes are both expected to open lower on Monday after a two-day sell-off wiped out billions in market value.

Though President Trump said he doesn’t want to see markets crash, he appeared unshaken by the sharp declines, stating, “Sometimes you have to take medicine to fix something.” He spent the weekend golfing in Florida and stood by the tariffs, including a new 10% “baseline” tax on all US trading partners that went into effect on Saturday.

In a new note, Deutsche Bank analysts said markets are still shaken by last Wednesday’s announcement of reciprocal US tariffs, which has increased investor fears of a looming recession.

They noted that S&P 500 futures were down another 3.55% overnight, which could push the index into a bear market—a 20% drop from its February peak—if losses are realized.

The analysts added, “The current sell-off is now approaching levels seen during the most severe market corrections of the last ten years.”

They warned that while tariffs will dominate headlines this week, investor focus is also shifting to potential retaliatory moves from other nations—particularly after China’s response triggered Friday’s sell-off.

China’s 34% retaliatory tariff on US goods is set to take effect on Thursday.