Risk Assets Trampled As Trump Touts Tariffs For All

It has been a rocky start to the week in Asia as a rush from risk left stocks down across the board, while bonds extended their rally and gold rose to another record.

Sentiment was fragile enough ahead of the announcement of the United States US tariffs on Wednesday but President Donald Trump made it more so by telling reporters on Air Force One that the levies would cover all countries and not just a select few. He has a habit of dropping these comments early in the Asia trading day when liquidity is lacking, and sets off big waves as a result.

The Nikkei led the rout with a fall of 3.8, the largest daily drop in six months, and pretty much all of Asia was in there. Nasdaq futures shed 1.3 and the major European stock futures followed.

Trumps new-found indifference to rising car prices seemed to convince analysts he was serious about going all in. Goldman Sachs now expects reciprocal tariffs will average 15 across all US trading partners. In the same note, it lifted the chance of a US recession to 35, from 20, and the R word seems to be on everyones lips.

Investors are counting on this coming slowdown to outweigh the inflationary impact of tariffs and prod the Fed into cutting grates by 75 basis points this year, though it would likely take a sharp rise in unemployment to warrant such action. Markets have around 60 bps of ECB easing priced in for this year and 50bps for the Bank of England.