Asian markets fall as Trump’s 104% tariff on China takes effect

President Donald Trump’s threatened 104% minimum tariff on all Chinese goods will come into effect at 12:01 a.m. Eastern time on Wednesday, sharply escalating the trade war between the world’s two largest economies.

China, the world’s biggest exporter, was hardest hit by Trump’s “Liberation Day” tariff blitz, but duties on a wide range of other countries — from the lowest blanket 10% to 49% on Cambodia and 46% on Vietnam — are all set to kick in.

Stocks in Asia traded lower when they opened Wednesday morning after another day of wild gyrations in U.S. markets with the S&P 500 index closing down 1.5%, bringing its total loss since mid-February to almost 20% — nearing a bear market.

Japan’s benchmark Nikkei 225 fell more than 3% when trading opened in Tokyo Wednesday, while Australia’s ASX 200 index lost 2%. South Korea’s KOSPI was down only slightly at the open, apparently buoyed by Trump saying he had a “great call” with South Korea’s acting president about a potential deal to remove the 25% tariff Trump threatened to impose on the ally’s exports.

Earlier, White House press secretary Karoline Leavitt confirmed that the tariffs on China would rise to 104%.

“It was a mistake for China to retaliate. When America is punched, [the president] punches back harder,” Leavitt said at a briefing Tuesday. “That’s why there will be 104% tariffs going into effect on China tonight at midnight.”

But she also suggested Trump was open to talking — as long as Beijing made the first move. “The president also wanted me to tell all of you that if China reaches out to make a deal, he’ll be incredibly gracious, but he’s going to do what’s best for the American people,” Leavitt said. “China has to call first.”

Beijing has remained defiant in the face of Trump’s threats. “The U.S. threat to escalate tariffs on China is a mistake on top of a mistake,” China’s Commerce Ministry said in a statement Tuesday. “China will never accept it. If the U.S. insists on its own way, China will fight to the end.”

Analysts say that, with the stock market down and cracks in support for Trump’s approach, Beijing feels it has the upper hand.

The tariffs will almost certainly raise prices for American consumers on products including clothes, shoes and electronics.

“Manufacturers here cannot absorb the burden,” Liang Mei, president of the China Toy and Juvenile Products Association, was quoted as telling the state-affiliated Global Times newspaper Wednesday. U.S. retailers would shoulder part of the cost and the rest “will be passed on to American consumers,” Liang said.

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Here’s how the tariff on Chinese goods got to 104%:

• With a Feb. 1 executive order, Trump imposed a 10 percent tariff on Chinese goods, saying it was punishment for Beijing’s lack of progress in stopping the flow of fentanyl and precursor chemicals to the United States.

• Beijing responded with a 15% levy on imports of U.S. coal and liquefied natural gas, as well as a 10 percent tariff on agricultural equipment and crude oil.

• At the end of February, Trump announced an additional 10 percent tax on Chinese goods, again citing the opioid epidemic. Beijing, which continues to insist that this a U.S. public health issue, imposed a 15% duty on imports of American farm products including chicken, pork and soy — a move designed to inflict pain in Trump-supporting agricultural states.

• In his “Liberation Day” tariff blitz, Trump imposed a further 34% tariff on all Chinese goods, to come into effect April 9, taking the blanket tariff to 54%.

• China responded two days later by levying a 34% blanket tariff on all products from the United States and condemned the Trump administration’s “unilateral bullying.” It also further restricted exports of rare earth minerals and filed a lawsuit with the World Trade Organization.

• Trump said Monday that if Beijing did not promptly withdraw the blanket measure, he would increase the duty on all Chinese goods by a further 50 points, taking the minimum tariff to 104%.

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Other countries begin negotiations

Other countries are trying hard to broker deals with the Trump administration to avert tariffs, with Treasury Secretary Scott Bessent telling CNBC that nearly 70 countries had approached the United States about negotiating over trade barriers. Argentina, Vietnam and Israel have indicated they will drop their tariff and regulatory barriers to U.S. exports.

In addition to Trump’s call with South Korea’s acting president Han Duck-soo, a delegation led by the country’s trade minister was due to arrive in Washington.

Japan’s prime minister, Shigeru Ishiba, held a call with Trump on Monday night about negotiations on the 24% tariff the U.S. president announced last week.

Trump posted on social media afterward that Japan had treated the U.S. “very poorly” on trade. “They don’t take our cars, but we take MILLIONS of theirs. Likewise Agriculture, and many other ‘things’,” he wrote on his Truth Social platform.