Asian stocks tumbled on Monday following former U.S. President Donald Trump’s announcement of hefty tariffs on Colombian goods, reigniting trade tensions. The looming Federal Reserve policy meeting and fears of an AI market shake-up added to investor uncertainty.
Trump’s decision to impose a 25% tariff on Colombian imports, escalating to 50% next week, came in retaliation for Colombia’s refusal to accept deportation flights from the United States. While Colombian President Gustavo Petro initially retaliated with similar tariffs, his administration later backed down, agreeing to accept deportees, resolving the immediate diplomatic standoff.
Investor Concerns
The tariff threats have rattled markets, with analysts warning that Trump’s aggressive use of trade measures could weigh heavily on global economies. Dane Cekov of Sparebank 1 Markets said, “This situation shows how quickly Trump is willing to leverage tariffs as a negotiation tool, heightening uncertainty.”
Meanwhile, traders are bracing for the Federal Reserve’s first policy meeting of the year. Although the Fed is expected to hold interest rates steady, Trump’s economic agenda — including tariffs and potential inflationary measures — has raised concerns that rate hikes may be back on the table.
AI Shake-Up and Market Volatility
The market was further shaken by the emergence of the DeepSeek AI program, which boasts performance comparable to leading American AI models despite its low $5.6 million development cost. This has spurred competition fears, as tech giants like Nvidia, Meta, and Alphabet have collectively invested hundreds of billions in AI development.
The launch of DeepSeek, coupled with Trump’s announcement of a $500 billion AI infrastructure project, sent tech and chip stocks tumbling. Tokyo’s Nikkei 225 fell 0.9%, with major tech players like Advantest and Tokyo Electron dropping over 8% and 5%, respectively. SoftBank, a significant investor in Trump’s AI initiatives, slumped more than 8%.
Market Summary as of 0710 GMT
- Tokyo (Nikkei 225): Down 0.9% to 39,565.80
- Hong Kong (Hang Seng): Up 0.7% to 20,201.14
- Shanghai (Composite): Down 0.1% to 3,250.60
- New York (Dow): Down 0.3% to 44,424.25 (close)
- London (FTSE 100): Down 0.7% to 8,502.35 (close)
Currency & Commodities
- Dollar/yen: 156.11 yen (+0.1%)
- Euro/dollar: $1.0458 (-0.4%)
- WTI Crude: $74.12/barrel (-0.7%)
- Brent Crude: $77.95/barrel (-0.7%)
