Asian shares slump as shockwaves from Trump tariffs rock global markets | BBC News

Speaker A [00:00:00]:
Global markets continue to feel the pain, with indices in Asia reeling on Monday as President Donald Trump's tariffs send shockwaves across the world. The White House now says more than 50 countries have contacted President Trump to try to negotiate deals here. Here's what President Trump said when asked about the chaos the tariffs have already caused.

Speaker B [00:00:20]:
I don't want anything to go down, but sometimes you have to take medicine to fix something. But I do want to solve the deficit problem that we have with China, with the European, UN Other nations, and they're going to have to do that. And if they want to talk about that, I'm open to talking. But otherwise, why would I want to talk?

Speaker A [00:00:40]:
For more on all the damage we're seeing in the Asian markets, let's cross to our Asia business reporter Marika Oy in the newsroom. Thank you for joining me, Marie Ko, first of all, tell me, how bad is it on the markets?

Speaker C [00:00:51]:
It's not looking great at all, Katie. It is a sea of red from Japan, South Korea to Australia, basically extending their losses from for a third day. Also, the mainland Chinese, Hong Kong and Taiwanese markets, which were closed on Friday for a public holiday, starting to trade once again, but sharply lower. Investors are experiencing what they describe as an ugly Monday. No sectors are spared. But if we were to look at some of the worst affected shares, Asian carmakers, of course, because of that 25% levy that Mr. Trump brought in on all imported cars into the United States. Also, banking shares are hit hard. Japanese banking shares are hit hard because of economists now thinking that the bank of Japan, the country's central bank, probably unlikely to raise interest rates. Also, if you look at British banking giants like HSBC and Standard Chartered, they're down by more than 15%. Of course, they were not trading on Friday. So they are reacting to what happened last Friday as well. But still, it goes to show investors clear concerns that not just the US Economy falling into a recession, but possibly these tariffs triggering a global recession.

Speaker A [00:02:06]:
Rico, they have been some really worried people, economists, analysts have been speaking with. Can you give us a sense about how governments are responding and perhaps trying to broker trade deals or negotiations to get themselves out of these tariffs?

Speaker C [00:02:20]:
Well, as you said, according to the White house, more than 50 governments have been in touch with Washington trying to negotiate some kind of a deal. One of the earliest and probably the strongest language reaction that we saw last week was from Beijing where they expressed strong opposition to those tariffs. Then on Friday evening, Asia time, Beijing slapped or reacted with matching retaliatory tariffs of 34% on all US imports. So that's what escalated the sell off in the European and American markets on Friday. And that's what Asian markets are reacting to today. But other governments are also in touch with Washington, Tokyo calling it a national crisis. Also the South Korean, the Taiwanese government offering to help those businesses which are directly hit by these tariffs. Interestingly, the Taiwanese government saying that they would not retaliate and they would probably lower import duties on American imports. So we've seen kind of different reaction from Asian governments. Some like Beijing reacting in retaliatory measures, others actually lowering tariffs on American imports, which is what Mr. Trump was hoping for.

Speaker A [00:03:30]:
Marika Oy, thank you for your reporting there. Now I'm joined now by Jayant Menon, senior fellow at the ICS Yousef Ishaq Institute. He was also the former lead economist at the Asian Development Bank. Thank you for joining me. At the moment you have countries in Southeast Asia all trying to negotiate separately. Indonesia, we're hearing about a delegation from Vietnam heading to Washington. Would they have more power if they negotiated together? Could they form a better deal?

Speaker D [00:03:58]:
I think they would. You know, when you have 50 countries knocking on your door, it's difficult to deal with all of them individually. And depending on your size, I mean, the smaller you are, the more there is to be gained by grouping together. I think the obvious grouping here is asean. And I think countries like Vietnam, Cambodia, Laos will benefit greatly if they could have a common position and negotiate as a group. We have to understand that the long term objective here from the US Administration as we've heard, is to balance bilateral trade flows. So conceding now or pandering now will not mean that this is the end. I think this is going to evolve. And as long as that objective is not achieved, which is unachievable by the way, balancing all these bilateral trade deficits, then we're going to see more and more of these types of actions in the future. So simply giving in if you like, now is not going to be the long run solution to this unpredictable and erratic trade policy stance of the US Administration.

Speaker A [00:05:16]:
You mentioned asean. The finance ministers for ASEAN are currently meeting.

Speaker C [00:05:20]:
Do you see?

Speaker A [00:05:20]:
Of course, I imagine this is going to be a big part of their conversation. Do you see them perhaps forming together to coordinate a response?

Speaker D [00:05:28]:
Oh, I think they will need to. The finance ministers and the economic ministers. They'll need to try and do that. The big question now is whether the individual approaches will cut into the strength of the common position. This is the classic prisoner's dilemma that they're facing. So if they don't cooperate and hold out for a common deal, then individual countries trying to do deals separately will reduce the veracity of the ASEAN negotiating position. But as you've already pointed out, this has already started. Many countries have already started doing this, so we'll have to just sort of work with what we've got. But I think ASEAN agreed position is important.

Speaker A [00:06:23]:
Could the US though just say, right, asean, that region, if they did play too hardball, they just say, right, this is too hard. There are other places we can host manufacturing in other countries in Africa, Latin America, potentially Eastern Europe that may offer some of the advantages that they previously had in hosting manufacturing bases in different ASEAN countries. Is there a chance that the US might just walk altogether?

Speaker D [00:06:47]:
I think there's a greater chance that this region, Southeast Asia might walk altogether. You know, it's not easy to recreate the conditions that the Southeast Asian region region provides for manufacturing supply chains. Africa or even India is not yet at a level of efficiency or development for that matter, to provide a decent alternative. I think the greater concern that the US should be worried about is the region turning away from it rather than the other way around. Let's not forget that the US is an important player even economically, but they're only about 15% of world trade. We can survive without them after a period of transition, which will be painful, but we don't have to pander to everything that they think that they need from the region.

Speaker A [00:07:44]:
Right. And so I guess how do you see all of this coming to a close? Do you see this as changing potentially the realignment of the global order? And will China look to take advantage?

Speaker D [00:07:56]:
I think what we will remember from all of this once the dust settles is that the US has unnecessarily given away decades of goodwill, both economic and non economic, for no good reason. This concern about being mistreated is misplaced. I think you're right. I mean the long term outcome of all of this will be a realignment that sees stronger regional cooperation economically especially we've got rcep, the Regional Economic Comprehensive Partnership that has been sitting on the railroad tracks now, not doing very much since it came into effect in 2022. I think this will give it a kickstart and I think yes, China will be the long run winner from all of this. Not because they're necessarily taking advantage and you can't blame them if they do, but they've been given this golden opportunity because of the vacuum created by the US withdrawing in this way. So I think China will gain, the US Will lose. But at the end of the day, actually, all of us will lose a little bit.