Asian stock markets took a hard hit on Friday as renewed fears of a deepening trade war between the United States and China spooked investors and triggered a broad sell-off across the region. Japan’s Nikkei 225 index led the downturn, tumbling by a sharp 5.46%, while the broader Topix index followed closely with a 5.05% drop.
The slump came just a day after Japanese stocks saw a surprising rally. That brief uptick was driven by U.S. President Donald Trump’s announcement of a 90-day suspension of tariffs, but crucially, the pause excluded China. The market optimism didn’t last long, as the focus quickly returned to the escalating conflict between the world’s two largest economies.
Other major Asian indices also suffered. South Korea’s Kospi index shed around 1.5%, and Australia’s S&P/ASX 200 fell by 2.4%, highlighting the widespread impact of the trade dispute.
Renewed Market Turmoil
This renewed market turmoil follows a major policy move from the U.S. earlier this month, when the Biden administration slapped a 10% general import tax and imposed a stunning 145% tariff on Chinese goods. In retaliation, China raised tariffs on American imports to 125%, triggering a fresh wave of economic uncertainty.
Investors worldwide are now grappling with fears that this tit-for-tat tariff escalation could derail global growth. The MSCI World Index, which tracks global stock performance, has already lost over $5 trillion in value since tensions reignited.
Despite the temporary pause on some tariffs, financial analysts warn that it’s not a sign of peace. Vishnu Varathan, an economist at Mizuho Bank, commented, “This is a delay, not a de-escalation. The trade war is still very much alive.”
With no resolution in sight, global markets are bracing for more volatility in the weeks ahead. Traders and investors will be watching closely as negotiations continue, and as both governments dig in their heels.
