Asian Stocks Fall as U.S.-China Trade Tensions Resurface

Asian stock markets started the week lower on Monday, as investors reacted to renewed trade war fears following fresh U.S. tariff threats and hints of retaliation from Beijing. Despite reassurances from President Donald Trump that relations with China “will be fine,” markets remained on edge while awaiting signs of de-escalation.

Hong Kong Tech Stocks Lead Regional Losses

Hong Kong’s Hang Seng Index fell 2.3%, leading regional declines amid a sell-off in major Chinese technology stocks. The Hang Seng TECH Index slid over 2%, with heavyweights Alibaba (HK:9988) and Tencent (HK:0700) losing ground. Mainland Chinese markets followed suit, as both the Shanghai Shenzhen CSI 300 and Shanghai Composite dropped nearly 1% each.

The weakness came after Trump announced plans to impose an additional 100% tariff on all Chinese exports to the U.S., citing national security and unfair trade practices. The move followed China’s decision to restrict exports of critical minerals vital to U.S. industries. Trump also indicated new export controls on U.S.-made software deemed crucial to national defense.

Beijing responded over the weekend, saying it “does not want a trade war but is not afraid of one,” warning of “appropriate countermeasures” if Washington follows through. The Chinese Commerce Ministry accused the U.S. of applying “double standards” and “politicizing economic competition.”

Broader Asian Markets Under Pressure

Elsewhere in Asia, selling pressure spread across major indexes. South Korea’s KOSPI dropped 1.3%, weighed down by semiconductor and industrial stocks sensitive to global trade flows. Australia’s S&P/ASX 200 slipped 0.6%, while Singapore’s Straits Times Index fell 1%, reflecting the cautious tone across regional markets.

In Japan, stock exchanges were closed for a public holiday, but Nikkei 225 futures rose 1.5%, supported by a weaker yen. The gains followed a political setback for Sanae Takaichi, whose coalition partner’s withdrawal has introduced uncertainty into Japan’s political landscape.

Trade War Fears Cloud Economic Outlook

The renewed tariff rhetoric comes at a fragile time for global markets, with investors already contending with sluggish Chinese economic data, policy tightening in major economies, and persistent inflation pressures. Analysts warned that escalating trade tensions could further weigh on Asian exports and global growth.

While Trump’s softer tone on Sunday helped lift U.S. futures slightly in early Asian trading, the region’s equities remained largely risk-averse. Market participants are now watching for official statements from both Washington and Beijing, hoping for diplomatic signals that could cool the situation.

Outlook

With trade headlines dominating sentiment, investors are likely to tread cautiously in the coming sessions. Renewed tariffs could threaten supply chains and add volatility across equity and commodity markets. Traders will also keep an eye on the U.S. government shutdown’s impact on global risk appetite, alongside upcoming earnings from major technology and industrial firms that could help gauge broader economic resilience.