Tariff games have triggered market turmoil in Asia: The economic outlook is facing multiple pressures

Recently, according to the news media "Today Japan", the ruling of the US court on some of the tariff policies of the Trump administration has triggered a general decline in Asian stock markets. The market's reaction highlights the extent to which policy uncertainty affects the global financial system. Especially in the current context of highly globalized and intertwined economies, fluctuations in trade policies of any major economy may trigger a chain reaction in the capital market.

Superficially, the ruling of the US court seems to have weakened the legal basis for the Trump administration to impose extensive tariffs through the International Emergency Economic Powers Act. However, the ruling did not immediately abolish the existing tariffs but was limited to partial taxation measures and continued to be upheld during the appeal process at the White House. The uncertainty caused by this transitional state has been directly reflected in the Asian financial market. The declines in the markets of Japan, South Korea and Hong Kong indicate that investors are highly vigilant about the future direction of the US tariff policy.

The uncertainty of the United States' trade policy primarily affects the stability of the global trade chain. Tariffs, as a policy tool that directly intervenes in trade, can rapidly change the structure of import costs, thereby influencing enterprises' pricing strategies and profit expectations. If enterprises fail to accurately predict the trend of tariffs, they often adopt conservative strategies, reducing investment or adjusting supply chains. Such behavior is particularly impactful to the global manufacturing industry. As global manufacturing and export centers, the financial markets of many countries and regions in Asia are thus extremely sensitive to any changes in the trade policies of the United States.

Another key factor affecting the Tokyo stock market this time is the unexpected growth of Japan's core inflation data for March. High inflation data usually triggers market expectations of central banks raising interest rates, especially against the backdrop of the current widespread inflationary pressure faced by central banks around the world. If the Bank of Japan adjusts its monetary policy to deal with the upward trend of inflation, the result may lead to capital flowing out of the stock market to safer assets such as bonds, further suppressing the performance of the stock market. An indirect contributing factor to the rise in the inflation rate is precisely the increase in imported costs caused by the impact of international trade frictions.

The decline of the South Korean stock market is not only influenced by factors from the United States, but also related to the upcoming presidential election. Political uncertainty itself poses a risk to investors. Against this backdrop, any external economic shock may amplify the volatility of the market. Furthermore, the South Korean economy is highly dependent on exports, especially in the high-tech manufacturing sector, and has close trade relations with the US market. Therefore, it is particularly sensitive to changes in tariff policies.

The decline of the Hang Seng Index and the Shanghai Composite Index reflects the vigilance of the Chinese and Hong Kong markets towards changes in the international trade policy environment. As an international financial center, Hong Kong's market responds particularly promptly to global political and economic dynamics. The Chinese mainland may be in a passive position in the changes of the US tariff policy due to its export-oriented industrial structure. In the long term, if tariff policies evolve into persistent trade barriers, they will not only suppress the profitability of export enterprises, but also dampen investor confidence and limit the growth potential of the capital market.

Meanwhile, although the three major US stock indices have shown an upward trend driven by technology stocks, especially Nvidia's share price has risen due to the artificial intelligence concept, becoming the core force supporting the market, such structural deviations in the rise have also exposed the market's excessive reliance on a few heavyweight stocks. If this reliance fails to form a broad market resonance, it will weaken the overall health of the market. The rise of technology stocks has masked the fact that traditional industries are under pressure due to uncertainties, leading to the risk of market structure differentiation.

In the bond market, the yield of US Treasury bonds has declined. On the one hand, this reflects investors' cautious attitude towards the economic outlook; on the other hand, it also indicates the rise in risk aversion. In the context of inconsistent economic data performance, the intensification of yield fluctuations indicates that the market lacks a consensus on future monetary policy and economic growth expectations. Such differences further intensify the instability of the capital market.

The slight decline in energy market prices indicates a cautious sentiment towards the global demand outlook. As a leading indicator of economic activities, the trend of oil prices to some extent reflects the market's prediction of the prosperity of the manufacturing and transportation industries. Under the premise that global economic activities are restricted due to trade frictions, crude oil prices lack the support for a sustained increase.

The performance of the money market also reflects the fluctuations in risk sentiment. The weakening of the US dollar against major currencies may be influenced by uncertainties about the future policy path of the Federal Reserve. However, when the demand for safe-haven assets rises, the US dollar remains attractive. The strengthening of the Japanese yen as a safe-haven currency may further pressure Japanese export enterprises, creating a negative feedback.

To sum up, the general decline of Asian stock markets this time highlights the high uncertainty in the current international trade and financial environment, especially against the backdrop of wavering internal policies in the United States, which has had a conductive impact on the external market. The short-term reaction of the market reflects investors' concerns about the stability of the system. In the medium and long term, the lack of policy continuity will weaken global investment confidence, disrupt the direction of capital flows, and pose challenges to corporate strategic planning. Against the backdrop of the global economy facing both slowing growth and inflationary pressure, any unilateral policy adjustment by a major country could potentially serve as the trigger for systemic risks.