Asian Markets Recover Amid Tariff Uncertainty, Gold Hits Record High

After weeks of heavy losses, Asian markets staged a modest rebound on Tuesday. However, investor sentiment remains fragile as uncertainty looms over U.S. President Donald Trump’s impending tariff announcement. Gold, a traditional safe-haven asset, surged to another record high, reflecting the ongoing market jitters.

Markets are bracing for what Trump has dubbed “Liberation Day” on Wednesday, when he plans to unveil sweeping tariffs on imports from “all countries.” While the president assured he would be “very kind” in his approach, he has provided little clarity on which nations and industries will be affected.

This uncertainty has rattled trading floors, intensified fears of a global recession, and prompted sell-offs across various equity markets.

Last week, Trump hinted at a 25% tariff on imported cars and auto parts, exacerbating concerns, particularly in Japan, where major automakers like Toyota and Honda have suffered significant losses.

The uncertainty surrounding the new trade measures has left investors on edge, with some speculating that global markets could remain volatile as governments decide whether to comply with or counteract the U.S. administration’s aggressive trade policies.

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Despite recent turbulence, Tuesday saw a partial recovery in several Asian markets. Tokyo, one of the hardest-hit exchanges due to the auto sector’s exposure, recorded modest gains.

Hong Kong, Shanghai, Sydney, Seoul, and Taipei also saw an uptick, though Singapore and Wellington dipped into the red. However, analysts warn that this rebound may be short-lived, much like Wall Street’s recent performance. On Monday, the S&P 500 managed to close higher but still wrapped up its worst quarter since 2022.

With global markets in flux, investors have turned to gold as a hedge against economic turmoil. The precious metal surged to an all-time high of $3,138.26 on Tuesday. Meanwhile, the VIX index—Wall Street’s widely watched “fear gauge”—climbed for a fourth consecutive day, signaling continued market anxiety.

Some analysts believe that the market reaction to Trump’s tariffs may not be as severe as initially feared, potentially leading to a short-term rally in risk assets. “Some on Wall Street are already discussing the possibility of a ‘lighter-than-feared’ scenario, which could spark a rebound,” said Jose Torres, senior economist at Interactive Brokers.

Others, however, remain cautious, pointing to mounting economic headwinds and the growing financial strain on households. “We continue to believe that markets, including Asian forex, are underestimating the scale of these tariffs,” noted Michael Wan of MUFG.

He added that Trump’s trade policies could mark a fundamental shift in the post-World War II global economic order, with lasting implications beyond the short-term volatility.

In a preemptive move, Vietnam announced tariff reductions on a range of goods, including automobiles, liquefied gas, and agricultural products, possibly as a strategy to mitigate potential fallout from Trump’s new policies. Other nations may soon follow suit, either seeking exemptions or preparing retaliatory measures.