Asian Markets Open Cautiously Amid U.S.-China Trade Tensions

Asian stock markets and the U.S. dollar began the week on a cautious note as trade tensions between Washington and Beijing resurfaced, and global investors braced for significant economic developments in both the U.S. and Europe.

Investor sentiment remained defensive on Monday, with minimal reaction to U.S. President Donald Trump’s unexpected announcement late Friday to double tariffs on imported steel and aluminum to 50%, effective June 4. The move triggered frustration among European Union negotiators and added another layer of uncertainty to global trade.

U.S. Treasury Secretary Scott Bessent, speaking on Sunday, revealed that President Trump is expected to speak soon with Chinese President Xi Jinping in an attempt to resolve a growing dispute over critical minerals.

However, Beijing responded strongly, dismissing Trump’s accusations and signaling that any such dialogue may not happen immediately.

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Meanwhile, the White House continued to downplay a recent court ruling that found Trump had exceeded his authority by imposing sweeping tariffs on U.S. trading partners. Despite the ruling, analysts believe the administration still has legal tools at its disposal to push forward with its trade agenda.

Bruce Kasman, Chief Economist at JPMorgan, noted, “The court ruling complicates the policy path, but the administration appears committed to keeping a minimum tariff rate of 10% and possibly increasing sector-specific tariffs.”

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He added that the U.S. may take further action to discourage transshipment through ASEAN countries and maintain pressure on EU trade.

As investors await clarity on whether Trump will follow through with the 50% tariff hike by midweek, market activity reflected a mood of restraint.

The MSCI Asia-Pacific index outside Japan remained flat, while Japan’s Nikkei fell 1.4%, and Hong Kong’s Hang Seng dropped 2.5%. South Korean shares showed slight gains, rising 0.2% on optimism surrounding Tuesday’s snap presidential election, which could bring political clarity.

In Europe, EUROSTOXX 50 futures dipped 0.2%, while FTSE and DAX futures saw minimal movement. Across the Atlantic, S&P 500 futures slipped 0.4%, and Nasdaq futures lost 0.5%, indicating investor caution after a strong May rally—driven by speculation that final tariffs could be significantly reduced from initial proposals.

With U.S. jobs data and an anticipated European Central Bank interest rate cut on the horizon, markets are expected to remain volatile. All eyes are on Wednesday, when Trump is expected to make a final decision on the tariff escalation, a move that could either escalate or ease trade-related anxieties across global financial markets.