Stock markets in Asia dropped on Monday morning after US President Donald Trump imposed tariffs on Canada, Mexico and China, leading to investors concern.
Investors are preparing for a possible trade war, which could reduce major companies’ profits and slow down global economic growth.
In response to Trump’s tariffs, Canada and Mexico have announced plans to impose their own tariffs, as per BBC.
Meanwhile, China has vowed to take similar action and challenge Trump’s decision at the World Trade Organization (WTO).
Trump claims the tariffs are needed to stop illegal drugs and immigrants from entering the United States.
Hong Kong's Hang Seng Index dropped by 1.3%, Japan's Nikkei 225 by 2.4%, South Korea's Kospi tumbled 3% and Australia's ASX 200 by 1.8%.
While, mainland China’s stock markets were closed due to the Lunar New Year holiday.
Meanwhile, the US dollar became stronger, reaching a record high against China’s yuan, while the Canadian dollar fell to its lowest level since 2003.
Trump has also promised to impose tariffs on the European Union "pretty soon.”
He further plans to discuss the tariffs with the leaders of Canada and Mexico on Monday, which are set to take effect at midnight on Tuesday.
Canada and Mexico will face a 25% tariffs on their exports to the US , while goods from China will be taxed an additional 10%.
