On Sunday, the U.S. president told reporters that he expected to slap tariffs on “all countries” come Wednesday, and dismissed suggestions that the initial wave of new U.S. levies would target a small number of countries. 

Markets in Asia, particularly those of U.S. allies, plunged at the start of the Monday trading day. Taiwan’s Taiex index was down 4.2%, the worst performer among major Asia-Pacific market indexes. Close behind was Japan’s Nikkei 225, which fell 4.1%. South Korea’s KOSPI dropped 3.0%, and Australia’s S&P/ASX 200 closed the day 1.7% lower.

East Asian economies are particularly at risk from Trump tariffs, owing to their reliance on export-led manufacturing. Japan, South Korea, and Vietnam all enjoy large trade surpluses with the U.S., making them likely targets if Washington decides to tackle trade imbalances.

TSMC, the world’s largest contract chipmaker and Asia’s most valuable company, was down by 4.4%. Taiwanese manufacturers Foxconn and Quanta Computer dropped by 5.2% and 6.9%, respectively.

Japanese automakers continued declines on Monday, following Trump’s announcement of flat 25% levies on car imports. Nissan dropped by 4.0%, while Toyota fell by 3.1%. Korean carmaker Hyundai was also down by 3.8%.

Chinese markets performed relatively better, though still in the red. Hong Kong’s benchmark Hang Seng Index was down by 1.0%, while the CSI 300, which tracks mainland Chinese companies trading in Shanghai and Shenzhen, dropped by 0.7%. (Indian markets are closed for the Eid al-Fitr holiday.)

Trump’s tariffs ‘difficult to understand’

Sentiments on Trump’s tariffs have whipsawed back and forth over the past week, as investors balance the president’s throwaway comments to reporters, executive orders from the White House, and media reports on internal trade policy debates.

A week ago, markets were soothed by Trump’s comments that tariffs may not be as bad as feared. “I may give lots of countries breaks,” he told reporters on March 24. That aligned with suggestions by Treasury Secretary Scott Bessent that tariffs would target the “Dirty 15,” a set of countries with persistent trade surpluses with the U.S.

Then, Trump announced a 25% tariff on any country that imports Venezuelan oil. (Venezuela shipped the most oil to China last year, followed by the U.S.) The White House ordered a new 25% duty on car imports two days later.

Trump has already imposed a 25% tariff on Canadian and Mexican imports, an additional 20% tariff on Chinese imports, and a flat 25% tariff on steel and aluminum imports. 

Media reports over the weekend suggest that Trump may want a tougher trade policy. The White House may be considering a universal tariff that hits imports regardless of origin, the Washington Post reported on Saturday. 

U.S. allies are puzzled as to how to react to Trump’s tariff threats. 

“What President Trump is saying is that there are both friends and foes, and friends can be more difficult. This is very difficult to understand,” Japanese Prime Minister Shigeru Ishiba complained during a legislative session on Friday. 

That same day, Chinese President Xi Jinping held a meeting for foreign business leaders, like Samsung’s Jay Lee, Toyota’s Akio Toyoda, and Saudi Aramco’s Amin Nasser. “All parties should work together to uphold the global economic order,” Xi told attendees. 

On Sunday, trade ministers from China, South Korea, and Japan met in Seoul to discuss the possibility of a free trade agreement between the three East Asian economies. While they didn’t announce any progress toward such an agreement, the three reiterated the importance of “economic and trade cooperation” in a joint statement.

The current U.S. tariff deadline is April 2, when the White House will roll out its next wave of import duties. The president has previously threatened tariffs on semiconductors, pharmaceuticals, and imports from the European Union.