Investing.com - Asian stocks fell after China announced plans to hike American tariffs and U.S. President Donald Trump warned Beijing against “substantial” retaliation.
China’s Shanghai Composite and the Shenzhen Component were both down 0.3% by 11:00 AM ET (03:00 GMT).
Hong Kong’s Hang Seng Index declined 1.5%. The city’s stock market was closed Monday for a holiday.
Japan’s Nikkei 225 was down 0.6%, while South Korea’s KOSPI edged up 0.5%.
Down under, Australia’s ASX 200 traded 1.0% lower.
Tension between the U.S. and China intensified after China announced on Monday that it would hike tariffs on $60 billion worth of U.S. goods. The raise will become effective on June 1.
The move came after Trump raised duties on $200 billion in Chinese goods to 25% from the previous 10%.
“I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!” Trump tweeted over the weekend.
In an interview with CNBC, Treasury Secretary Steven Mnuchin said the two countries are “still in negotiations.” Trump also said the U.S. is in a “great position,” noting that “our economy has been very powerful; theirs has not been.”
Meanwhile, Trump said he will meet his Chinese counter Xi Jinping at next month’s G-20 summit in Osaka, Japan.
“There can be some retaliation, but it can’t be very substantial,” Trump told reporters Monday at the White House during a meeting with Hungarian Prime Minister Viktor Orban.
Later in the day, Trump said it would become apparent “in about three or four weeks” whether trade talks with China were successful.
“You never really know, right?” Trump said at an Iftar dinner at the White House. “But I have a feeling it’s going to be very successful.”
Overnight, the U.S. stocks dove more than 2% following Beijing’s announcement of a tariff increase. Companies that are particularly dependent on trade with China underperformed. Apple (NASDAQ:AAPL), which counts China as a major market, fell 5.8%.