Asian Markets Decline as Trump Acknowledges Tariff Transition Costs
Asian markets declined significantly after President Trump’s comments on the impact of tariffs, specifically regarding ‘transition costs’. The Nikkei 225 led the downturn with a decline of 4.5%. Concurrently, gold prices surged to record highs, while Vietnam is seeking to negotiate lower tariffs amid U.S.-China trade tensions. China’s yuan continues to struggle, reflecting the ongoing economic impact of these tensions.
Asian markets experienced a significant downturn on Friday, following a sharp decline on Wall Street. This drop was largely attributed to President Donald Trump’s remarks regarding potential “transition costs and problems” associated with his global tariff policy. Trump indicated that should countries fail to engage in negotiations within 90 days, he would implement the full rate of his proposed “reciprocal” tariffs.
In a Cabinet Room address, Trump declared, “There will always be transition difficulty—but in history, it was the biggest day in history, the markets. So we’re very, very happy with the way the country is running.” He stated confidence in the nation’s economic status, asserting that despite transition challenges, the outcome would ultimately be positive. Meanwhile, Japan’s Nikkei 225 led the decline in Asia with a drastic fall of 4.5%, while other regional markets also suffered losses.
Despite anticipated tariffs potentially pushing Apple to produce iPhones domestically for the first time, experts argue that the complexities of its established supply chain in China diminish that likelihood. Trump’s trade policies have increased tariffs on Chinese products to an effective 145%, but moving production to the U.S. could inflate iPhone prices significantly, jeopardizing Apple’s market performance.
Gold prices surged, hitting a record high of $3,171.49 per ounce as investors turned toward the precious metal amid declining U.S. dollar strength and escalated trade tensions. Analysts from Tradu.com noted that gold regained its status as a safe-haven asset but cautioned that potential trade agreements could pose risks to gold’s upward momentum.
In efforts to mitigate the impact of U.S. tariffs, Vietnam is negotiating to reduce a recently imposed 46% levy by promising stricter controls over transhipment fraud. Vietnam aims to lower this tariff to approximately 22-28% through dialogue with U.S. officials.
China’s yuan showed slight recovery against the U.S. dollar but continued struggling against a basket of other currencies, reflecting the ongoing trade tensions. The People’s Bank of China is managing this depreciation carefully to prevent capital flight, while analysts suggest a broader currency strategy may enhance Chinese export competitiveness.
Amid these economic challenges, President Xi Jinping of China is scheduled to visit Vietnam, Malaysia, and Cambodia, marking a diplomatic effort during rising U.S.-China trade tensions. Xi’s visit to Vietnam is anticipated to strengthen trade relations, amidst a backdrop of tariffs and trade negotiations affecting the region.
Asian markets faced substantial losses as fears escalate over trade negotiations and economic forecasts. Japan’s market fell by 4.5%, with South Korea, Hong Kong, and Australia also affected. However, mainland China’s Shanghai Composite and Taiwan’s Taiex displayed resilience, contrasting the general regional downturn.
The article highlights a significant downturn in Asian markets due to President Trump’s acknowledgment of potential transition costs from his tariff policies. While Apple faces challenges in relocating production to the U.S., gold prices rise amid trade tensions. Vietnam is negotiating tariff reductions while China manages its currency amidst ongoing trade disputes. Finally, Xi Jinping’s upcoming diplomatic trip underscores regional efforts to navigate these economic challenges.
Original Source: www.independent.co.uk
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