Asian stocks drop, bonds jump as Trump tariffs sap risk

S&P 500 futures sank over 3.5% while contracts on the Nasdaq 100 slid 4.5%. Shares in Australia, Japan and South Korea tumbled at the open Thursday. US 10-year Treasury yields slumped with the flight to havens also lifting the Japanese yen and gold, which touched a new record high.

Trump said Wednesday he will apply a minimum 10% tariff on all exporters to the US and slap additional duties on around 60 nations. That includes substantially higher rates on some of top trading partners, such as China, the European Union and Vietnam.

Two months into Trump’s presidency, sentiment in Wall Street has turned from optimism to nervousness as market participants remain wary about how the levies will impact global growth. Central banks have started to factor in the potential inflationary impact from the duties and equity strategists have trimmed their forecasts for US stocks as investors stay concerned about retaliation to the US tariffs from countries.

“Eye-watering tariffs on a country-by-country basis scream ‘negotiation tactic,’ which will keep markets on edge for the foreseeable future,” said Adam Hetts at Janus Henderson Investors.

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Trump’s announcement came after three days of gains for the S&P 500 index as hopes were dashed the tariff program would have a lighter touch. Traders across asset classes must now brace for what promises to be a grueling stretch of trade negotiations, against an economic backdrop that has shown signs of softening as companies and consumers adjust to Trump’s offensive.

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