Connect with us

Business

Asian Stocks Drop Amid Fresh Trade Fears and AI Competition Concerns

Asian stocks mostly fell on Monday following a fresh wave of trade fears after former U.S. President Donald Trump threatened to impose significant tariffs on Colombian goods in retaliation for the country’s refusal to accept deportation flights from the U.S.

The tension started when President Gustavo Petro of Colombia blocked the deportation flights, prompting Trump to announce a 25% tariff on Colombian goods, set to rise to 50% in the coming week. The dispute briefly escalated as Colombia retaliated with its own 25% tariff on U.S. imports. However, after negotiations, Colombia agreed to resume accepting the deported individuals, easing the situation for now.

The tariff threat rattled global markets, particularly Asian equities, as traders began assessing the potential impact of Trump’s protectionist policies. Despite his earlier signals of a less aggressive stance on trade, including refraining from immediately imposing tariffs on China, Trump’s move on Colombia demonstrated his willingness to use tariffs as a negotiation tool. “Actions speak louder than words,” said Dane Cekov from Sparebank 1 Markets.

In addition to trade concerns, Asian markets were also grappling with rising competition in the artificial intelligence sector. Chinese company DeepSeek launched a generative AI programme, claimed to rival top-tier models from tech giants like Nvidia, Meta, and Alphabet. The program, developed at a fraction of the cost of its competitors, has sparked fears of an intensifying AI arms race. This development came as Trump also announced a $500 billion initiative to build AI infrastructure in the U.S., further heightening competition fears.

Read Also: Bauchi Governor Labels Wike a Threat to PDP, Calls for His Resignation

The yen weakened against the dollar as traders sought safe havens, sending gold prices near record highs. Meanwhile, investors were preparing for a busy week ahead, with the Federal Reserve’s first policy meeting of the year expected to influence market sentiment. Although the Fed is widely anticipated to keep interest rates unchanged, there are concerns that Trump’s tariff policies and tax cuts could stoke inflation, prompting the central bank to pause its rate cuts or even raise rates again.

In the stock markets, Japan’s Nikkei ended lower, with tech and chip firms among the biggest losers. Companies like Advantest and Tokyo Electron saw significant losses, while SoftBank, a key investor in Trump’s AI project, dropped over 8%. Other Asian markets, including Shanghai, Singapore, and Mumbai, also saw losses, though Hong Kong’s Hang Seng Index rose by 0.7%.

Overall, the markets remain on edge as they adjust to the evolving trade and tech landscape, with major earnings reports and key inflation data likely to shape the coming days.