Tariffs update: Asian shares drop, Japan’s Nikkei down as China-US trade war escalates

After a week of ups and downs - slumps when the tariffs were announced and leaps when Trump paused them - Friday has so far seen shares sink. Yesterday US shares lost a lot of the ground they gained after they jumped on Wednesday.

Japan’s Nikkei 225 share index was down 5.6%, and by mid-morning in Tokyo, it was down 4.7% at 32,969.95.

The yen surged against the US dollar, which also lost value against the euro.

South Korea’s Kospi was down 1.6% to 2,400.34, while in Australia, the S&P/ASX 200 lost 2.1% to 7,552.10.

On Thursday, the S&P 500 in America tumbled 3.5%, slicing into Wednesday’s surge of 9.5% following Mr Trump’s decision to pause many of his tariffs worldwide. The Dow Jones Industrial Average dropped 1,014 points, or 2.5%, and the Nasdaq composite tumbled 4.3%.

But China announced more countermeasures against the United States, and losses for US stocks accelerated after the White House clarified that the United States will tax Chinese imports at 145%, not the 125% rate that Mr Trump had written about in his posting on Truth Social on Wednesday, once other previously announced tariffs were included.

The drop for the S&P 500 exceeded 6% at one point.

All told, the S&P 500 fell 188.85 points on Thursday to 5,268.05. The Dow Jones Industrial Average dropped 1,014.79 to 39,593.66, and the Nasdaq composite sank 737.66 to 16,387.31.

“Trump blinks,” UBS strategist Bhanu Baweja wrote in a report about the president’s decision on tariffs, “but the damage isn’t all undone”.

China, meanwhile, has been seeking to join forces with other countries in apparent hopes of forming a united front against Mr Trump. The world’s second-largest economy is also ramping up its own countermeasures to the US president’s tariffs.

The stock price of Warner Bros. Discovery, the company behind A Minecraft Movie, dropped 12.5% for one of Wall Street’s sharpest losses after China said Thursday it will “appropriately reduce the number of imported US films”.

The Walt Disney Co’s stock sank 6.8%

A spokesperson for the China Film Administration said it is “inevitable” that Chinese audiences would find American films less palatable, given the “wrong move by the US to wantonly implement tariffs on China”.

That was after Mr Trump and his Treasury secretary Scott Bessent sent a clear message to other countries on Wednesday after announcing their pause on tariffs for most countries: “Do not retaliate, and you will be rewarded”.

The European Union said on Thursday it will put its trade retaliation measures on hold for 90 days and leave room for a negotiated solution.

Thursday’s swings also hit the bond market, which has historically played the role of enforcer against politicians and economic policies it deemed imprudent. It helped topple the United Kingdom’s Liz Truss in 2022, for example, whose 49 days made her Britain’s shortest-serving prime minister.