The MSCI Asia Pacific Index, which tracks equities across 15 developed markets in the region, has recorded its steepest fall since the global financial crisis of 2008, according to Bloomberg.
The sharp decline reflects mounting investor anxiety following the imposition of new US import tariffs and retaliatory measures announced by China.
The latest wave of market turbulence was triggered by Washington’s decision to implement additional duties on a wide range of imported goods. In response, Beijing announced plans to impose a 34% tariff on all imports from the United States starting 10 April. Chinese authorities also indicated that further economic support measures are being prepared to counter the impact of the trade dispute.
The sell-off has been widespread across Asia. The MSCI Asia Pacific Index experienced its most severe single-day drop in over a decade. In Tokyo, the benchmark Nikkei 225 slipped into bear market territory, reflecting a decline of more than 20% from recent highs. The Japanese government has signalled a more cautious stance, with officials reportedly considering diplomatic negotiations with Washington rather than a reciprocal trade response.
Taiwan’s tech-heavy equity index fell by 9.7%—the largest single-day loss in its recorded history. The fall reflects concerns over the vulnerability of the global semiconductor supply chain, given Taiwan’s key role in advanced chip production.
In India, the principal stock index fell by 5.1%, marking the most significant decline since June. The market reaction there is attributed not only to the global trade outlook but also to weakening investor sentiment ahead of national elections.
Chinese markets also experienced heavy selling. Analysts attribute the losses to fears that the trade conflict with the United States could weigh on domestic growth and broader global demand. Sectors tied to exports and industrial production were among the hardest hit.
Speaking to reporters on Sunday, US President Donald Trump defended the decision to introduce new tariffs, stating, “Sometimes you have to take the medicine to fix things.” The tariffs, which came into effect last week, are part of Washington’s broader effort to narrow the trade deficit and address what it describes as unfair practices in international trade.
The escalation in trade measures has revived fears of a prolonged economic confrontation between the world’s two largest economies. Market analysts note that both sides appear to be preparing for an extended period of uncertainty, with China pledging countermeasures and the US administration signalling no immediate intention to roll back the tariffs.
The developments have prompted a reappraisal of risk in global markets. Analysts are warning of the potential for continued volatility as investors weigh the implications for global growth, supply chains, and corporate earnings. Safe-haven assets, including the US dollar and gold, saw inflows amid the regional equity downturn.
There is also growing concern among multinational corporations operating in the Asia-Pacific region. Many are reviewing their exposure to US-China trade flows and assessing the potential consequences for investment plans. Export-driven industries in countries such as South Korea, Malaysia, and Vietnam may also be affected if the trade conflict continues to disrupt global supply networks.
Policy responses across the region remain varied. While Japan appears to favour diplomatic engagement, China is adopting a more assertive stance, framing the tariffs as an attack on its economic sovereignty. Indian authorities have so far avoided making any formal statements in response to the developments, although the Reserve Bank of India is expected to monitor the situation closely for potential spill-over effects.
The renewed trade dispute has heightened fears over its potential macroeconomic consequences. Speaking on 4 April, IMF Managing Director Kristalina Georgieva warned that escalating US tariff measures “pose a significant risk” to the global economy, particularly during a period of weak and uneven growth.
With no immediate resolution in sight, markets are expected to remain under pressure in the coming weeks. Traders will be closely watching for any signals from upcoming talks between US and Chinese officials, as well as economic data releases that may shed light on the broader effects of the trade dispute.
The latest developments mark a significant deterioration in the global trading environment and have raised the prospect of a return to protectionist policies that many believed had receded since the 2008 crisis. Investors are now bracing for further instability as geopolitical and economic uncertainties continue to mount.
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