TAIPEI (Taiwan News) — Asian stocks slumped on Monday following US President Donald Trump’s tariffs announcement, fueling fears of a new global trade war, Nikkei Asia reported Monday.

Invoking the International Emergency Economic Powers Act, Trump signed executive orders imposing a 10% tariff on Chinese goods and 25% on products from Mexico and Canada, effective Tuesday, per CNN.

Economist Intelligence Unit Regional Director for Asia Pacific Alex Holmes said equity markets and currencies are selling off due to risk aversion and tighter US Federal Reserve policy expectations.

Head of Equity and Derivative Strategy for Asia Pacific at BNP Paribas Jason Lui (呂成) said investors will adjust their strategy depending on Trump’s follow-through actions. Investors thought Trump would use tariffs as a negotiation tool, but he seems to be more serious than the market expected, Lui said. 

However, the tariffs are expected to increase prices for US consumers and cause the Federal Reserve to hold rates steady. In turn, Asian currencies would likely depreciate against the US dollar, which means their value will decrease. However, investors could pull out of the country if taken too far.

According to Nikkei Asia, the MSCI AC Asia Pacific Index, which tracks Asian equities, was off nearly 3%. Following the Lunar New Year holiday, Taiwan’s TAIEX opened 4% lower as it played catch up with the impact of Chinese AI chatbot DeepSeek.

Australia’s AXJO, which often serves as a proxy for Chinese markets, slumped more than 2%, per Reuters. South Korea’s KOSPI fell nearly 3%.

Quanta Computer, a major supplier to Tesla and Nvidia, plummeted nearly 10%. Foxconn and TSMC were down 8% and 6%.

Regarding currencies, a stronger dollar made Asian currencies weaker. Mizuho Securities Chief Global Strategist Shoko Omori said two-year Treasuries are rallying, leading to a strong dollar, while other currencies are being sold.

The offshore Chinese yuan, which is traded more freely outside China, weakened to 7.36 before rebounding, per Nikkei Asia. The onshore yuan market, which trades within a range of a fixing set by the People’s Bank of China, is closed for the holidays.

Goldman Sachs said Beijing’s reaction to the tariffs has been relatively muted. China’s Ministry of Commerce said it would file a complaint with the WTO and defend its rights, per New York Times.