Asian shares sink, with Japan’s Nikkei down 5.6% as China-US trade war escalates

Asian shares sank Friday after U.S. stocks gave up much of their historic gains from the day before.

The deepening worries over President Donald Trump’s trade war initially helped pull Japan’s Nikkei 225 share index down 5.6%.

By mid-morning in Tokyo, it was down 4.2% at 33,148.45.

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

One dollar bought 143.64 Japanese yen, down from about 146 yen a day earlier. The euro rose to $1.1306 from $1.1195.

South Korea’s Kospi fell 1.3% to 2,413.16, while in Australia, the S&P/ASX 200 shed 1.2% to 7,619.70.

In China markets, Hong Kong’s Hang Seng edged down 0.4% to 20,606.04 and Shanghai’s lost 0.2% to 3,218.94.

Taiwan’s Taiex gained 1.5% as investors expect more orders would transfer to Taiwan under the worsening China-US trade war.

China announced more countermeasures against the United States and losses for U.S. stocks accelerated after the White House clarified that the United States will tax Chinese imports at 145%, not the 125% rate that Trump had written about in his posting on Truth Social Wednesday, once other previously announced tariffs were included. The drop for the S&P 500 exceeded 6% at one point.

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

Investors are viewing Trump’s decision to delay higher tariffs for most countries for 90 days as a ploy, not a pivot, Stephen Innes of SPI Asset Management said in a commentary.

“That’s the market hitting the brakes, hard. The sugar high from Trump’s tariff pause is fading fast, and Asia’s about to feel the comedown. The champagne’s flat, the party’s over and the tape is twitching,” he wrote.

On Thursday, the S&P 500 tumbled 3.5% to 5,268.05, slicing into Wednesday’s surge of 9.5% following Trump’s decision to pause many of his tariffs worldwide. The Dow Jones Industrial Average dropped 2.5% to 39,593.66, and the Nasdaq composite tumbled 4.3% 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.”

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 U.S. 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 U.S. to wantonly implement tariffs on China.”

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

The European Union said 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.

Earlier this week, big jumps for U.S. Treasury yields had rattled the market, so much that Trump said Wednesday he had been watching how investors were “getting a little queasy.”

Several reasons could have been behind the sharp, sudden rise in yields. Hedge funds may have sold Treasurys in order to raise cash, and investors outside the United States may be dumping their U.S. government bonds because of the trade war. Regardless of the reasons behind it, higher Treasury yields crank up pressure on the stock market and push rates higher for mortgages and other loans for U.S. households and businesses.

The 10-year Treasury yield had calmed following Trump’s U-turn on tariffs, dropping all the way back to 4.30% shortly after the release of a better-than-expected report on inflation Thursday morning. That’s after it had shot up to nearly 4.50% Wednesday morning from just 4.01% at the end of last week.

As Thursday progressed, though, the 10-year Treasury yield climbed once again and reached 4.40%. It was trading at 4.39% early Friday.

In other dealings early Friday, U.S. benchmark crude oil lost 37 cents to $59.70 per barrel in electronic trading on the New York Stock Exchange.

Brent crude, the international standard, fell 30 cents to $63.03 per barrel.

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AP Business Writer Stan Choe contributed.