Several Asian stock markets suffered massive losses during Monday’s trading session after US President Donald Trump indicated that there may be no country-specific exclusions from his tariff measures, fueling concerns of a major global trade war.

Japan’s Nikkei crashed over 4 per cent, while Korea’s Kospi plunged over 3 per cent during the session on March 31.

On Friday, Nasdaq crashed 2.70 per cent and S&P 500 dropped 1.97 per cent. On Monday, Dow Jones Futures fell about half a per cent.

Indian stock market is closed today to celebrate Eid-ul-Fitr.

What’s fueling the sharp selloff in Asian markets?

The biggest concern weighing on global stock markets is the mounting fear of a deeper economic fallout from Trump’s aggressive tariff policies.

While there is uncertainty about their impact on the global economy, there is a growing belief that the US, the world’s largest economy, could enter a recession within the next 12 months.

Trump announced a 25 per cent tariffs on imported cars which dealt a severe blow to automobile stocks in Japan and Korea.

The auto tariffs are expected to hit Japan and Korea the most as these countries are among the top automobile exporters to the US.

The hope for exemptions from US tariffs remains slim, as Trump has stated that the tariffs will apply to all countries.

“Trump’s comments to reporters on Air Force One seemed to dash hopes the levies would be more limited. Trump is due to receive tariff recommendations on Tuesday and announce initial levels on Wednesday, followed by auto tariffs the day after,” reported Reuters.

Economists fear that aggressive tariffs will deal a significant blow to the US economy and drive up inflation in the short term.

Analysts at Goldman Sachs have raised US tariff assumptions, expecting the average tariff rate to rise 15 percentage points in 2025. The global financial firm believes that higher US tariffs could drive up inflation by raising consumer prices, ultimately weighing on GDP growth in the world’s largest economy. A slowdown in economic growth could, in turn, lead to a rise in the unemployment rate.

Goldman Sachs now sees a 35 per cent probability of a 12-month recession in the US against a 20 per cent probability earlier.

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