Global markets have endured severe volatility this month as the president looks to ramp up pressure on global partners by imposing or threatening hefty duties on their goods, citing huge trade imbalances.
On Tuesday, Trump threatened to double those on Canada after the province of Ontario imposed an electricity surcharge on three US states. The president called that off after Ontario halted the charge.
Traders appeared largely unmoved by Trump’s attempt to soothe worries over a recession after he warned at the weekend of “a period of transition” and refused to rule out a downturn.
But Nicole Inui at HSBC wrote in a note: “The back and forth on tariff announcements is playing havoc with consumer and business confidence: policy uncertainty is at a record high, consumer confidence dropped sharply and small business optimism has pared back.
After another selloff in New York that saw the Nasdaq extend Monday's four percent dive, Asian traders were also in a dour mood.
But Hong Kong, Shanghai, Wellington, Mumbai, Bangkok and Manila were in the red, with Sydney down more than one percent, on concerns about the impact of Trump's latest tariffs on Australia's economy.
There is a fear that the tariffs, and plans to slash taxes, regulation and immigration will fan inflation again, forcing the bank to hold borrowing costs for longer or even hike them.
“For years, the US has been the undisputed leader of global markets, fuelled by aggressive fiscal spending, tech dominance, and a strong consumer,“ said Charu Chanana, chief investment strategist at Saxo markets.
Key figures around 0700 GMT
Hong Kong - Hang Seng Index: DOWN 1.1 percent at 23,520.71
Euro/dollar: DOWN at $1.0900 from $1.0915 on Tuesday
Dollar/yen: UP at 148.20 yen from 147.70 yen
West Texas Intermediate: UP 0.1 percent at $66.34 per barrel
New York - Dow: DOWN 1.1 percent at 41,433.48 points (close)
London - FTSE 100: DOWN 1.2 percent at 8,495.99 (close)
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