Asia markets fall after Trump announces Mexico tariffs
Hong Kong, China | AFP | Friday 5/31/2019 – Asian stocks edged down Friday despite modest gains on Wall Street overnight as US President Donald Trump’s sudden announcement of tariffs on all Mexican imports saw Tokyo shares drop.
Trump’s Twitter announcement of a five percent tariff on all goods from Mexico starting 10 June sent shares in automakers with plants in the North American country falling sharply.
Trump said the duties would gradually increase until “illegal migrants” stop coming into the US through Mexico.
Mexico’s undersecretary for North American affairs called the move “disastrous” and vowed to retaliate.
The announcement saw shares in Japanese automakers plunge in early trade with Honda dropping 3.75 percent to JPY 2,665, Mazda plummeting 6.25 percent to JPY 1,071.5, Nissan down 3.66 percent to JPY 747.4 and Toyota slipping 2.54 percent to JPY 6,404.
Tokyo’s main index fell 0.8 percent while Hong Kong edged down 0.2 percent. Singapore slipped 0.5 percent and Sydney was down 0.1 percent. Shanghai managed a 0.1 percent gain.
Coming amidst a protracted trade war between the US and China, the latest tariffs announcement will do little to soothe investors’ anxieties.
In recent days, China and the US have ramped up their rhetoric, with Beijing accusing Washington of “naked economic terrorism” and Trump dismissing the Asian superpower as “a very weakened nation.”
The two sides have not set a date for negotiations to resume in the row that has seen Washington and Beijing slap tit for tat tariffs on imports while Trump’s decision to blacklist Chinese telecom giant Huawei earlier this month has added a new dimension to the fractious relationship.
“Markets are getting nervous that we may not see anything constructive on the trade front until the 28 to 29 June G20 summit where president Trump and his Chinese counterpart will meet on the sidelines,” said Olsen & Associates (OANDA) senior market analyst Edward Moya.
“The longer the trade war lasts, the greater the global growth deterioration,” he said.
Oil prices fell after a smaller than expected drop in US crude supplies with new data showing US oil production at an all-time high.
“US production appears to be ramping up too quickly to allow inventories to come down much,” Moya said.
“Gasoline inventories also posted a strong rise for a second consecutive week despite the beginning of the summer driving season.”