Asian markets dip as Donald Trump escalates trade war with China

Asian stocks tumbled Monday after US President Donald Trump reignited trade tensions by announcing a sharp increase in tariffs and accusing China of breaching a recent trade truce.Trump,on Friday said that, steel and aluminium tariffs would be doubled to 50% from 25%, claiming the move would further protect the US steel industry. He also accused China of “totally violating” the agreement made last month to pause tariff hikes for 90 days while both sides worked on a broader deal. US commerce secretary Howard Lutnick added fuel to the fire, saying on Fox News that China was “slow-rolling” the agreement.China firmly rejected the accusations, calling them baseless and “seriously contrary to the facts.” They criticised Washington for making “bogus charges and unreasonably accused China of violating the consensus, which is seriously contrary to the facts”.The developments have thrown the trade war back into the spotlight, having been put on the back burner after the China detente and indications that governments were working deals with US officials.Asian markets declined on the day, despite positive data showing the Federal Reserve’s preferred inflation measure had cooled beyond expectations last month, as concerns about tariffs’ economic impact dominated sentiment.Hong Kong’s market fell over two percent, with property companies particularly affected due to concerns surrounding New World Development’s delayed bond interest payments.The company is currently seeking to secure more than US$11 billion in bank refinancing. Its difficulties have sparked renewed worries about China’s property sector, where companies face challenges selling inventory to service substantial debt obligations.Declines were also recorded in Tokyo, Sydney, Singapore, Taipei, Manila and Jakarta, whilst Shanghai remained closed for a holiday.Oil prices rose sharply after OPEC and its allies announced a smaller-than-expected production hike for July, while fears of war escalation grew as Ukraine launched drone strikes on Russian air bases.Meanwhile, the US dollar weakened over concerns about the American economy, as Trump pushes for extended tax cuts and welfare reductions. Critics warn this could add trillions to the national debt, spooking bond markets and driving Treasury yields higher. Credit rating agency Moody’s downgraded the US’s last top-tier rating, citing a likely surge in federal deficits. JPMorgan CEO Jamie Dimon also warned of a potential crisis in the US bond market, calling the situation a “real problem.”“The bond market is going to have a tough time. I don’t know if it’s six months or six years,” he added.Market snapshot as of 02:30 GMT