Asian stocks slumped on Friday, with sharp declines in South Korea and Japan, as investors reacted to the latest tariff move from U.S. President Donald Trump. Meanwhile, gold soared to a record high, reflecting the growing unease in global markets.
Trump has pressed ahead with a 25% tariff on imported automobiles, set to take effect next week. The move has drawn fierce criticism from political leaders and industry executives worldwide, with automakers warning of inevitable price hikes.
The escalating trade war, reignited after Trump regained the White House, has rattled global markets, particularly hitting automakers.
In Asia, Japan’s Nikkei 225 plunged nearly 2%, weighed down by steep losses in Toyota and Honda stocks. South Korea’s KOSPI also saw a 2% decline, reflecting the auto sector’s significance to both nations’ economies.
European stock futures pointed lower as well, with Germany’s DAX futures down 0.2%, while U.S. futures remained relatively unchanged.
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Fred Neumann, chief Asia economist at HSBC, remarked, “While these tariffs were anticipated, they still create uncertainty. Some producers might shift supply chains or relocate production, but consumers will likely bear some of the cost increases.“
Several automakers—including Volvo, Volkswagen’s Audi, Mercedes-Benz, and Hyundai—have already begun relocating portions of their production to mitigate the impact. Ferrari, which manufactures all its vehicles in Italy, announced a price hike of up to 10% on certain models.
Beyond the auto sector, traders are closely watching Trump’s next moves on China tariffs. While Trump expressed willingness to ease tariffs in exchange for a favorable TikTok deal with parent company ByteDance, uncertainty looms over reciprocal U.S. measures set to be announced on April 2. Unlike his previous tit-for-tat approach, Trump hinted at a different kind of response this time.
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Thierry Wizman, global FX and rates strategist at Macquarie, noted, “As expected, trade war rhetoric is driving another round of risk-off sentiment. Investors are weighing the implications, but tariffs are widely seen as both restrictive to growth and inflationary.”
The U.S. dollar remained steady ahead of key inflation data, with February’s Personal Consumption Expenditures (PCE) price index expected to show core inflation at 2.7%. Despite the stability, the dollar is heading for a quarterly decline due to fears over trade war repercussions on U.S. economic growth.
Meanwhile, the euro dipped slightly to $1.0788, but remains on track for a 4% gain in the first quarter of the year. The Japanese yen strengthened to 150.67 per dollar, gaining 4% this quarter as investors bet on further interest rate hikes by the Bank of Japan (BOJ).
Fresh data showed Tokyo’s core consumer inflation remained elevated in March, reinforcing expectations for BOJ policy tightening.
Gold prices climbed to an all-time high as investors sought safe-haven assets amid growing trade tensions. Spot gold rose 0.77% to $3,079.50 per ounce, marking a 17% increase in Q1 2025, its best quarterly performance since 1986.
Michael Brown, senior research strategist at Pepperstone, highlighted, “Central banks in emerging markets continue to buy gold aggressively to diversify foreign exchange reserves. This, coupled with rising haven demand, strengthens the bullish case for gold.”
Oil prices saw a slight dip as traders weighed supply concerns against the potential economic slowdown caused by new U.S. tariffs. Brent crude futures edged 0.24% lower to $73.85 per barrel, while U.S. West Texas Intermediate crude fell 0.27% to $69.73 per barrel.
Global markets remain on edge as the U.S. pushes ahead with trade restrictions, fueling concerns over economic growth and inflation. With Asian stocks tumbling, gold soaring, and currencies reacting to shifting trade policies, investors are bracing for a turbulent period ahead.
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