Asian stocks slide as Trump escalates trade tensions with China

Asian stocks dropped sharply on Monday after U.S. President Donald Trump reignited trade tensions by announcing a dramatic increase in tariffs on steel and aluminium. The move, which doubled existing levies to 50%, came alongside accusations that China had breached a recent agreement aimed at easing trade hostilities.

The escalation follows comments from U.S. Commerce Secretary Howard Lutnick, who said Beijing was “slow-rolling” the implementation of the truce negotiated last month. That temporary deal had boosted market sentiment and raised hopes for a longer-term resolution between the world’s two largest economies.

Treasury Secretary Scott Bessent offered a glimmer of optimism, saying President Trump might soon speak directly with Chinese President Xi Jinping to help break the deadlock. Still, the White House is grappling with legal challenges after a trade court blocked Trump’s sweeping tariff plan, calling it an overreach of presidential authority. An appeals court temporarily allowed the measures to proceed, but the final outcome remains uncertain.

China pushed back against the U.S. accusations, calling them "bogus" and "contrary to the facts," warning that the new tariffs undermine ongoing negotiations.

Markets reacted negatively. Hong Kong’s Hang Seng Index fell over 2%, led by steep losses in property stocks. Investor anxiety grew after New World Development postponed interest payments amid a major refinancing effort. The firm’s financial troubles have rekindled concerns about the broader Chinese property sector, already under pressure from high debt and weak sales.

Other regional markets also retreated: Tokyo’s Nikkei dropped 1.5%, while Sydney, Singapore, Taipei, Manila, and Jakarta posted losses. Shanghai was closed for a public holiday.

Meanwhile, global oil prices jumped as OPEC and allied producers increased output for July, though by less than expected. Geopolitical tensions also flared after Ukraine launched strikes on Russian air bases, raising fears of a wider conflict.

The U.S. dollar weakened amid mounting concerns over Washington’s fiscal path. Trump is pushing for extended tax cuts and reduced welfare spending—moves that critics say could explode the national debt. Bond yields rose as investors demanded better returns, while Moody’s downgraded the U.S.'s top credit rating, citing long-term deficit concerns.

JPMorgan CEO Jamie Dimon weighed in on Sunday, warning that the bond market faces serious risks if current U.S. policies continue. “It’s a big deal. It is a real problem,” Dimon said in a preview of his interview with FOX Business.

Market Snapshot as of 02:30 GMT

Tokyo - Nikkei 225: ↓ 1.5% at 37,414.02
Hong Kong - Hang Seng: ↓ 2.3% at 22,753.81
Shanghai: Closed for a holiday
Euro/USD: ↑ $1.1370
Pound/USD: ↑ $1.3493
USD/JPY: ↓ 143.50 yen
Euro/Pound: ↓ 84.26 pence
Oil (WTI): ↑ 2.8% to $62.50/barrel
Oil (Brent): ↑ 2.5% to $64.34/barrel
Dow Jones (NY): ↑ 0.1% at 42,270.07
FTSE 100 (London): ↑ 0.6% at 8,772.38