Asian rally snaps as Trump threatens ‘take it or leave it' levies
HONG KONG, June 12 — Asian shares were rattled today after Donald Trump said he would impose unilateral tariffs on partners in the next two weeks, reigniting trade war fears soon after reaching a deal with China to dial down tensions between the superpowers.
The mood was also shaded by geopolitical concerns after the US president said personnel were being moved from the Middle East as nuclear talks with Iran faltered and fears of a regional conflict grew.
The equity losses snapped a recent rally fuelled by talks between Beijing and Washington in London that saw them hammer out a framework agreement to move towards a pact to reduce levies.
Investors have been on edge since Trump's 'Liberation Day' tariff blitz on April 2 that sent shockwaves through stock and bond markets and stoked global recession fears.
Days later he announced a pause in those measures until July 9 to allow for countries to cut deals with the White House, sparking relief rallies that have pushed some markets towards all-time highs.
However, he once again shook confidence by saying yesterday that he intended to send letters telling governments what levies Washington would be imposing.
'We're going to be sending letters out in about a week and a half, two weeks, to countries, telling them what the deal is,' he told reporters.
'At a certain point, we're just going to send letters out. And I think you understand that, saying this is the deal, you can take it or leave it.'
While some analysts indicated that previous threats had been rowed back, the comments added to the ongoing uncertainty about Trump's policies, reviving fears about sky-high levies and the impact on the economy.
They also came not long after he had flagged the London agreement, and posted on social media that 'President XI and I are going to work closely together to open up China to American Trade', referring to his counterpart Xi Jinping.
'The uncertainty doesn't help,' Nick Twidale at AT Global Markets Australia said. 'And his overall comments overnight have led to more uncertainty for the market rather than the clarity we were hoping for.'
Most Asian markets fell today, with Tokyo, Hong Kong, Shanghai, Wellington, Taipei and Jakarta in the red after a broadly healthy run-up this week. There were gains in Sydney, Singapore and Seoul.
The weak performance followed losses on Wall Street, where trade worries overshadowed another below-forecast inflation reading that provided fresh speculation the Federal Reserve will cut interest rates.
Oil prices slipped but held most of yesterday's surge of between four and five per cent that came after Trump said US personnel were being moved from the potentially 'dangerous' Middle East as Iran nuclear talks stutter.
The move came as Tehran threatened to target US military bases in the region if a regional conflict broke out.
The US president said the staff were 'being moved out because it could be a dangerous place'.
'We've given notice to move out and we'll see what happens.'
With regard to Iran, he then added: 'They can't have a nuclear weapon, very simple. We're not going to allow that.'
Trump had until recently expressed optimism about the talks, but said in an interview published yesterday that he was 'less confident'. — AFP
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