TOKYO- Stocks fell and bond yields slid on Tuesday in Asia with investors ducking for cover as new US tariffs on Canada, Mexico and China took effect, threatening to escalate global trade tensions.
Japan’s Nikkei dropped 1.6 percent and Taiwan’s benchmark lost 0.5 percent. Hong Kong’s Hang Seng fell 0.4 percent. Mainland blue chips eased 0.2 percent.
Asian equities tracked the biggest losses on Wall Street this year from overnight, with the S&P 500 sliding 1.8 percent and the tech-heavy Nasdaq dropping 2.6 percent.
However, US futures pointed about 0.2 percent higher, signaling the sell-off may peter out later in the global day.
Europe looked headed for a lower open though, with STOXX 50 futures pointing down 0.8 percent.
The risk-sensitive Australian dollar slid and crude oil wallowed near 12-week lows, while bitcoin languished around $86,000 after erasing the surge to the cusp of $95,000 that started the week.
Sterling held close to a 1 1/2-month high and the euro was also firm as European leaders drew up a Ukraine peace plan to present to Washington.
Investors turned sharply more risk averse after US President Donald Trump confirmed on Monday that 25 percent tariffs on Canada and Mexico would go into effect on Tuesday, along with a doubling of China levies to 20 percent.
Market players were concerned about the fallout for the US economy as well, particularly amid a run of soft data in recent weeks.
Those worries escalated on Monday with figures showing factory gate prices jumped to a nearly three-year high and materials deliveries were taking longer, suggesting that tariffs on imports could soon hamper production.
However, Asian stocks pared initial steep losses, finding some comfort in the measured reaction from Trump’s tariff targets, although Beijing did immediately announce reciprocal tariffs, as did Ottawa.
Higher China tariffs “will likely hurt the US itself as it needs cheap Chinese products to bring down inflation,” said Wang Zhuo, partner of Shanghai Zhuozhu Investment Management.
