A man walks past a bank electronic board showing the Hong Kong share index at Hong Kong Stock Exchange Wednesday, July 11, 2018. Asian markets are broadly lower after the Trump administration said it was preparing to impose tariffs on another $200 billion of Chinese exports, upping the ante in the trade war between the world’s two largest economies. (AP Photo/Vincent Yu)
SINGAPORE — Asian markets have tumbled after the Trump administration said it was preparing to impose tariffs on another $200 billion of Chinese exports, upping the ante in the trade war between the world’s two largest economies.
Japan’s benchmark Nikkei 225 fell 0.9 percent to 22,000.81 and South Korea’s Kospi lost 0.4 percent to 2,285.34 in morning trading. Hong Kong’s Hang Seng shed 1.4 percent to 28,269.72. The Shanghai Composite index tumbled 1.9 percent to 2,774.78. Australia’s S&P/ASX 200 dropped 0.6 percent to 6,220.70. Shares also fell in Taiwan and Southeast Asia.
A strong performance by household goods makers lifted major US indexes. The S&P 500 index rose 0.3 percent to 2,793.84 on Tuesday, climbing to its highest level since February 1. The Dow Jones Industrial Average added 0.6 percent to 24,919.66. The Nasdaq composite picked up 3 points, or less than 0.1 percent, to 7,759.20. The Russell 2000 index of smaller-company stocks lost 0.5 percent to 1,695.62 after big gains over the last five days.
The United States Trade Representative said Washington is preparing to impose 10 percent tariffs on another $200 billion in Chinese imports, including 6,031 product lines ranging from burglar alarms to electric lamps and fish sticks. The office will take public comments and hold hearings on the plan before reaching a decision after August 31.
On Friday, the US imposed 25 percent tariffs on $34 billion in Chinese products, and Beijing responded with similar duties on US imports. The Trump administration said the new levies were a response to China’s decision to retaliate. The initial US tariff list focused on Chinese industrial products to help limit the impact on American consumers. The expanded list would hit products that US households buy.
“Given the magnitude and breadth of the tariff list, the impact is expected to ripple through supply chains and cause collateral damage on regional economies,” Zhu Huani of Mizuho Bank said in a commentary. However, the public consultation period allows time for more negotiations, she noted.
Against this backdrop was the announcement of electric car producer Tesla that it will build its first factory outside the United States in Shanghai. This will make it the first wholly foreign-owned automaker in China. No financial details of the agreement signed Tuesday were announced, but construction is expected to start as soon as official permits come through.
The company hopes to eventually ramp up production to 500,000 vehicles annually.
Tesla is among companies hit by an additional 25 percent in import duties, imposed by Beijing in retaliation to a tariff hike by the Trump administration.
Benchmark US crude dropped 56 cents to $73.55 a barrel. It gained 0.4 percent to settle at $74.11 a barrel in New York. Brent crude, used to price international oils, lost 77 cents to $78.09 per barrel.