U.S. President Donald Trump’s tariff war has thrown global financial markets into turmoil.
After the U.S. imposed 34% tariffs on Chinese goods, Beijing retaliated with matching duties and rare earth export controls, triggering the worst crash in Asian markets since the 2008 financial crisis on April 7.
South Korea’s benchmark Korea Composite Stock Price Index plunged over 5% at the open, triggering a five-minute halt in program trading under the sidecar rule. After a day of panic selling, the KOSPI ended down 5.57%, while the junior KOSDAQ shed 5.25%. Japan’s Nikkei also tumbled 7.83% by the close.
Markets in Greater China took an even heavier blow after reopening from the Qingming Festival break. Taiwan’s Taiex plunged 9.7%, Hong Kong’s Hang Seng Index sank 13.22%, and the Shanghai Composite dropped 7.34%. The Hang Seng’s one-day loss surpassed its worst single-day drop of 12.7% during the 2008 financial crisis.
European markets followed with intraday losses of 3% to 6%, while Wall Street opened sharply lower. The S&P 500 slid over 4%, falling below the 5,000 mark, and the tech-heavy Nasdaq also dropped more than 4%, dipping under 15,000.
Despite the global market turmoil, Trump maintains his hard-line stance. Speaking to reporters aboard Air Force One on April 6 while returning from Florida to Washington, he said, “I don’t want anything to go down, but sometimes you have to take medicine to fix something.” The remark signaled his intent to press ahead with tariffs to reduce the U.S. trade deficit, even as financial markets crumble.
JPMorgan Chairman Jamie Dimon warned in his annual shareholder letter on April 7 that “economic fragmentation with our allies may be disastrous in the long run.” He pointed out that “The quicker this [tariff] issue is resolved, the better, because the negative effects increase cumulatively over time and would be hard to reverse.”
The panic selling that hit Asian markets on April 7 followed a nearly 10% plunge in U.S. stocks over two sessions on April 3 and 4. The reaction reflects mounting fears that the U.S.-China tariff war is no longer just rhetoric but a fast-developing reality. With China imposing retaliatory tariffs and company sanctions, tensions between the world’s two largest economies are escalating into a full-scale trade war. Other major players, including the EU and Canada, are also preparing to strike back.
Vincent Chan, a China strategist at Aletheia Capital, told Bloomberg, “The global trade system for the past 90 years is collapsing, leaving it difficult for people to forecast the economic impact and tell where the bottom for a market is.”
Foreign investors offloaded 2.09 trillion won ($1.42 billion) in South Korean stocks and dumped another 1.18 trillion won ($802 million) in KOSPI 200 futures on the same day, bringing total net sales to 3.27 trillion won—the fifth-largest foreign outflow on record. Market leaders and export heavyweights including Samsung Electronics (-5.17%), SK Hynix (-9.55%), Hyundai Motor (-6.62%), and Kia (-5.69%) all declined. Even shipbuilding and defense stocks—once considered tariff war safe havens—suffered heavy losses, including Hanwha Aerospace (-8.55%), HD Hyundai Heavy Industries (-8.17%), and Hanwha Ocean (-9.81%).
Investors also fled previously resilient Chinese markets. Tech giants including Tencent, Alibaba, and Xiaomi tumbled between 12% and 20% during the session.
