Asian shares slump as shockwaves from Trump tariffs rock global markets

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00:00Global markets continue to feel the pain, with indices in Asia reeling on Monday, as

00:05President Donald Trump's tariffs send shockwaves across the world.

00:09The White House now says more than 50 countries have contacted President Trump to try to negotiate

00:14deals.

00:15Here's what President Trump said when asked about the chaos the tariffs have already caused.

00:20I don't want anything to go down, but sometimes you have to take medicine to fix something.

00:25But I do want to solve the deficit problem that we have with China, with the European

00:31Union and other nations, and they're going to have to do that.

00:34And if they want to talk about that, I'm open to talking, but otherwise, why would I want

00:39to talk?

00:40For more on all the damage we're seeing in the Asian markets, let's cross to our Asia business

00:44reporter Mariko Oi in the newsroom.

00:47Thank you for joining me, Mariko.

00:48First of all, tell me, how bad is it on the markets?

00:51It's not looking great at all, Katie.

00:53It is a sea of red from Japan, South Korea to Australia, basically extending their losses

00:59for a third day.

01:01Also, the mainland Chinese, Hong Kong and Taiwanese markets, which were closed on Friday

01:06for a public holiday, starting to trade once again, but sharply lower.

01:12Investors are experiencing what they describe as an ugly Monday.

01:16No sectors are spared.

01:18But if we were to look at some of the worst affected shares, Asian car makers, of course,

01:23because of that 25 percent levy that Mr. Trump brought in on all imported cars into the United

01:29States.

01:30Also, banking shares are hit hard.

01:32Japanese banking shares are hit hard because of economists now thinking that the Bank of Japan,

01:38the country's central bank, probably unlikely to raise interest rates.

01:42Also, if you look at British banking giants like HSBC and Standard Chartered, they're down

01:48by more than 15 percent.

01:49Of course, they were not trading on Friday, so they are reacting to what happened last Friday

01:55as well.

01:55But still, it goes to show investors clear concerns that not just the U.S. economy falling

02:01into a recession, but possibly these tariffs triggering a global recession.

02:05Riko, there have been some really worried people, economists, analysts I've been speaking with.

02:12Can you give us a sense about how governments are responding and perhaps trying to broker

02:15trade deals or negotiations to get themselves out of these tariffs?

02:19Well, as you said, according to the White House, more than 50 governments have been in touch

02:24with Washington trying to negotiate some kind of a deal.

02:28One of the earliest and probably the strongest language reaction that we saw last week was

02:32from Beijing, where they expressed strong opposition to those tariffs.

02:37Then on Friday evening Asia time, Beijing slapped or reacted with a matching territory tariffs

02:44of 34 percent on all U.S. imports.

02:47So that's what escalated the sell off in the European and American markets on Friday.

02:52And that's what Asian markets are reacting to today.

02:55But other governments are also in touch with Washington, Tokyo calling it a national crisis.

03:01So the South Korean and the Taiwanese governments are offering to help those businesses which

03:06are directly hit by these tariffs.

03:08Interestingly, the Taiwanese government saying that they would not retaliate and they would

03:13probably lower import duties on American imports.

03:17So we've seen a kind of different reaction from Asian governments, some like Beijing reacting

03:23in the territory measures, others actually lowering tariffs on American imports, which is what

03:28Mr. Trump was hoping for.

03:31Marika Oi, thank you for your reporting there.

03:33Now, I'm joined now by Jayant Menon, senior fellow at the ICS Yusof Ishak Institute.

03:38He was also the former lead economist at the Asian Development Bank.

03:41Thank you for joining me.

03:43At the moment, you have countries in Southeast Asia all trying to negotiate separately.

03:47Indonesia, we're hearing about a delegation from Vietnam heading to Washington.

03:52Would they have more power if they negotiated together?

03:55Could they form a better deal?

03:58I think they would.

04:00You know, when you have 50 countries knocking on your door, it's difficult to deal with all

04:05of them individually.

04:07And depending on your size, I mean, the smaller you are, the more there is to be gained by grouping

04:14together.

04:15I think the obvious grouping here is ASEAN.

04:18And I think countries like Vietnam, Cambodia, Laos will benefit greatly if they could have

04:26a common position and negotiate as a group.

04:31We have to understand that, you know, the long term objective here from the US administration,

04:38as we've heard, is to balance bilateral trade flows.

04:42So conceding now or pandering now will not mean that this is the end.

04:48I think this is going to evolve.

04:50And as long as that objective is not achieved, which is unachievable, by the way, balancing

04:56all these bilateral trade deficits, then we're going to see more and more of these types of

05:01actions in the future.

05:03So simply giving in, if you like, now is not going to be the long run solution to this

05:10unpredictable and erratic trade policy stance of the US administration.

05:16You mentioned ASEAN, the finance ministers for ASEAN are currently meeting.

05:20Do you see, of course, I imagine this is going to be a big part of their conversation.

05:24Do you see them perhaps forming together to coordinate a response?

05:28Oh, I think they will need to.

05:30The finance ministers and the economic ministers, they'll need to try and do that.

05:34The big question now is whether the individual approaches will cut into the strength of the

05:44common position. This is the classic prisoner's dilemma that they're facing. So if they don't

05:50cooperate and hold out for a common deal, then individual countries trying to, you know,

05:57do deals separately will reduce the veracity of the ASEAN negotiating position. But as you've

06:08already pointed out, this has already started. Many countries have already started doing this.

06:14So we'll have to just sort of work with what we've got. But I think ASEAN agreed position is important.

06:22Could the US, though, just say, right, ASEAN, that region, if they did play too hardball,

06:28they just say, right, this is too hard. There are other places we can host manufacturing in other

06:33countries in Africa, Latin America, potentially Eastern Europe that may offer some of the advantages

06:38that they previously had in hosting, you know, manufacturing bases in different ASEAN countries.

06:44Is there a chance that the US might just walk altogether?

06:47I think there's a greater chance that this region, Southeast Asia, might walk altogether.

06:52You know, it's not easy to recreate the conditions that the Southeast Asian region provides for

07:02manufacturing supply chains. Africa or even India is not yet at a level of efficiency or development,

07:11for that matter, to provide a decent alternative. I think the greater concern that the US should be

07:17worried about is the region turning away from it rather than the other way around. Let's not forget

07:23that the US is an important player, even economically, but they're only about 15% of world trade. We can

07:32survive without them after a period of transition, which will be painful, but we don't have to

07:40pander to everything that they think that they need from the region.

07:45Right. And so, I guess, how do you see all of this coming to a close? Do you see this as

07:50changing potentially the realignment of the global order and will China look to take advantage?

07:56I think, you know, what we will remember from all of this once the dust settles is that the US has

08:03unnecessarily given away decades of goodwill, both economic and non-economic, for no good reason.

08:14This concern about being, you know, mistreated is misplaced. I think you're right. I mean, the long-term

08:23outcome of all of this will be a realignment that sees stronger regional cooperation,

08:30economically especially. We've got RCEP, the Regional Economic Comprehensive Partnership,

08:38that has been sitting on the railroad tracks now, not doing very much since it came into effect in 2022.

08:46I think this will give it a kickstart. And I think, yes, China will be the long-run winner from all of

08:54this, not because they're necessarily taking advantage, and you can't blame them if they do. But

08:59they've been given this golden opportunity because of the vacuum created by the US withdrawing in this

09:08way. 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.

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