Asian stocks tumbled on Thursday, with Japan leading the declines, after U.S. President Donald Trump unveiled sweeping 10% tariffs on most imports and much higher reciprocal duties on some countries.

U.S. stock futures plummeted between 3% and 5% in early Asia hours.

Trump’s tariff hike sparks global trade concerns

President Trump on Wednesday announced a comprehensive overhaul of U.S. trade policy, instituting a universal 10% tariff on all imported goods, effective April 5, 2025. 

Additionally, "reciprocal tariffs" targeting specific nations deemed to have significant trade barriers against U.S. products will take effect on April 9, 2025. These reciprocal tariffs are approximately half of the rates those countries impose on U.S. exports.

Under this new policy, China faces a combined tariff of 54%, with the new 34% surcharge atop an existing 20% levy. 

Other notable tariffs include 24% on Japan, 20% on the European Union, 26% on India, 32% on Taiwan, and 46% on Vietnam. 

Additionally, a 25% tariff on foreign-made automobiles and key auto parts was set to take effect on April 3, 2025.

The announcement could have dire implications for Asian economies, particularly export-driven nations like China, Japan, and Vietnam. The increased tariffs may lead to reduced export volumes to the U.S., potentially slowing economic growth in these countries. 

Japan’s Nikkei hits 8-month low on tariff hit

Japan’s Nikkei 225 slumped as much as 4.7% on Thursday to its lowest level since early August 2024. It was trading 2.8% lower as of 02:08 GMT. 

TOPIX index declined 3.1%.

“Since the US announced 25% auto tariffs will take effect from April 3, Japanese stocks have pulled back significantly and underperformed other major markets,” JPMorgan analysts said in a recent note.

Tariffs impacting Japan include item-specific duties, such as on autos and semiconductors, and reciprocal tariffs. The latter will have a smaller effect due to Japan’s low tax rates. However, a 25% tariff on autos—making up one-third of Japan’s exports to the U.S.—could have a major impact, according to JPMorgan.

JPMorgan analysts highlighted that major Japanese automakers, including Toyota (TYO:7203), Honda (TYO:7267), and Nissan (TYO:7201) would likely face higher costs, potential price increases, and weaker demand, weighing on earnings.

Asia stocks fall; China services PMI, Australia trade data in focus

China’s Shanghai Composite inched 0.2% lower, while the Shanghai Shenzhen CSI 300 index lost 0.4%. 

Hong Kong’s Hang Seng index dropped 1.8%.

Data on Thursday showed that China’s services sector grew more than expected in March, with the Caixin Services PMI rising above expectations to 51.9.

In Australia, data showed that the trade balance sank to a more than four-year low in February, as exports fell sharply.

Australia’s S&P/ASX 200 index fell 1.1%.

Other regional markets were also lower. Singapore’s Straits Times Index lost 0.4%.

South Korea’s KOSPI declined 1.2%, while the Philippines’ PSEi Composite dropped 1%.

Futures for India’s Nifty 50 were 0.2% lower.