The president announced levies on up to $60 billion of imports from China for what he describes as the “theft” of American intellectual property, fuelling speculation that a strong recovery in the world economy could be thrown off course.

Thursday’s announcement comes just weeks after the White House imposed stinging taxes on steel and aluminium products entering the US — causing equities to plunge — as Trump drives through with his America First protectionist agenda.

China responded immediately to the latest volley from Washington by releasing a list of potential tariffs on $3 billion worth of US goods, from pork to fruits and wine, warning that it was “not afraid of a trade war”.

Wall Street was sent spiralling by the news with all three main indexes shedding between 2.4 percent and 2.9 percent.

And those losses filtered through to Asia. Tokyo was hammered 3.6 percent, with exporters also hit by a surging yen, which is considered the go-to currency in times of turmoil and uncertainty.

The greenback fell below 105 yen for the first time since November 2016, while it was also down against the euro and pound.

– US worse off? –

Hong Kong collapsed 3.4 percent and Shanghai lost three percent, while Sydney sank two percent. Singapore dived 1.8 percent and Seoul was 2.3 percent down, while Wellington gave up more than one percent, Taipei fell 1.5 percent and Manila dropped 2.3 percent.

Hannah Anderson, global market strategist at JP Morgan Asset Management, said: “The economic impact on both China and the US will be determined by what form the tariffs end up taking. The effects are likely to be felt more strongly in the US and increase in both consumer and producer prices.

“Exports are extremely important to the Chinese economy, but have been trending less so in recent years and the US has been shrinking as a share of China’s export market.

“The equity market will bear the brunt of the market reactions. Most impacted will be the US, Korea, and Taiwan as companies domiciled in these markets make up a significant portion of the global production chain of Chinese exports. Chinese listed firms, on the other hand, derive most of their sales — around 80 percent — from the domestic market.”

Analysts also said the traders were also spooked by the fact China is the biggest buyer of Treasuries, which the US needs to keep its economics wheels greased.

Key figures around 0200 GMT

Tokyo – Nikkei 225: DOWN 3.6 percent at 20,808.27

Hong Kong – Hang Seng: DOWN 3.4 percent at 30,001.33

Shanghai – Composite: DOWN 3.0 percent at 3,167.33

Dollar/yen: DOWN at 104.92 yen from 105.35 yen

Euro/dollar: UP at $1.2331 from $1.2308 at 2100 GMT

Pound/dollar: UP at $1.4118 from $1.4103

Oil – West Texas Intermediate: UP 78 cents at $65.08 per barrel

Oil – Brent North Sea: UP 71 cents at $69.62 per barrel

New York – Dow: DOWN 2.9 percent at 23,957.89 (close)

London – FTSE 100: DOWN 1.2 percent at 6,952.59 (close)

“If a trade war were initiated by the US, China would fight to the end to defend its own legitimate interests with all necessary measures,” China’s embassy in Washington said in a statement.

“We urge the US to cease and desist,” the embassy said, warning that by endangering China-US trade relations Washington will “eventually end up hurting itself.”

In the latest in a series of aggressive moves on trade, mostly targeting China, Trump authorized new sanctions on up to $60 billion of Chinese imports to retaliate against “theft” of American intellectual property.

The tariffs and the goods targeted will be identified in the coming weeks, but Trump said they could be as high as 25 percent – what he called a “reciprocal tax.”

The embassy’s statement was issued moments after markets closed on Wall Street but investors had already taken Trump’s move as a bad omen, with the benchmark Dow Jones Industrial Average falling more than 700 points amid fears of a tit-for-tat trade confrontation.

Washington accuses Beijing of forcing US companies to enter joint ventures and transfer technology and trade secrets to their Chinese partners. At the same time US companies are not able to license intellectual property in China.

US officials also allege China has hacked US networks and conducted industrial espionage to steal intellectual property.

The embassy said China had shown “sincerity in making reasonable suggestions” and made “great efforts” to deal with the current trade imbalance with the United States.

The United States recorded a record $337.2 billion trade deficit with China last year, and Trump demanded it be reduced by $100 billion.

For the second time in a month, events in Washington whipped anxiety that Trump’s “America First” confrontations with major trading partners were headed toward full-scale trade conflict.

But Commerce Secretary Wilbur Ross suggested the new measures on intellectual property were in fact a way of bringing Beijing to the table, calling them “the prelude to a set of negotiations.”

Adul Chotinisakorn, DFT director-general, said the department had held discussions with the Federation of Thai Industries, Iron and Steel Institute of Thailand, Metal Tube and Cold-Forming Steel Association, related Thai manufacturers and exporters as well as the Office of Commercial Affairs in Washington, DC last Tuesday (March 20) for submission of the exclusion request.

Thai manufacturers and exports will join US importers to submit the exclusion requests which will show that steel and aluminum product imports from Thailand are not produced or in insufficient amount in the US and it is necessary to import Thai steel and aluminum products to prevent any impacts from the US measures on US importers or users, he said.

On March 8, 2018, US President Donald Trump announced that the US would impose tariffs of 25 per cent on steel and 10 per cent on aluminum on every foreign shipment of those metals into the US, with exemptions for Canada and Mexico, in order to protect national security.

The currency, long in the spotlight after if its run-up against the greenback over the past year, appreciated to 31.16 to the dollar on yesterday’s opening, while shares on the Stock Exchange of Thailand (SET) Index reached as high as 1,812.89 points in early trading before a late-afternoon descent below 1,800.

Traders were responding the first rise in the US benchmark interest rate this year, announced by the Fed on Wednesday.

Jitipol Puksamatanan, a strategist of Krungthai  Bank, said that the baht’s rise to 31.16 to the US dollar, after the market opening, contrasted with its mark of 31.22 at the close of the previous day’s trading.

Although returns on US dollar assets will rise, markets viewed this rate increase as expected and the US dollar weakened on market disappointment over  the likelihood there would not be a faster pace of monetary tightening this year.

“We believe that the Fed has not hastened its rate hikes as the US economy and inflation look better in only the short term,” Jitipol said.

“In the long term, both may not expand as much as the Fed expects. More money-market fluctuations could prompt the Fed to take more caution on the rate hikes and its signalling, which could lead to market volatility.”

In the Wednesday decision, the Federal Reserve increased interest rates by a quarter of a percentage point to a range of 1.5-1.75 per cent after improved US economic figures, accelerating inflation and higher employment. The central bank forecast two more rate rises for 2018, while predicting three more increases next year and two more in 2020.

The Fed said that the US economic outlook had strengthened over the past months on expectation for inflation to rise in the coming months, taking the  rate close to the Fed’s target. This year’s estimated US economic growth was revised up to 2.7 per cent from an earlier forecast of 2.5 per cent. US core and headline inflation is expected at 1.9 per cent this year.

Jitpol said the Fed made it clear to markets that the pace of rate rises would be at the slower end of expectations, with the signalling for the three increases this year. Many market observers had been factoring in four rises this year.

Jitpol said the Fed had decided to raise rates gradually, adding that if the central bank acted with too much haste, there would be volatility in the markets.

In the future, there is a higher probability for the Fed to raise the benchmark rate to 2.25 per cent as targeted, as markets had started to accept the rate increases, Jitpol said, adding that he expected the baht and other Asian currencies would not be affected too much.

The baht would move in line with the economic conditions of Thailand and its trading partners, he said. This week, the Thai currency is forecast to move in a narrow range of 31 to 31.30 per US dollar.

Jitipol said that this year, the direction of the baht is more likely to be determined by the state of international trade and the economic expansion of Thailand’s trading partners, rather than on the interest-rate gap. He expects the baht to move with the support lines at 30.80 and 29.25 per dollar, and resistance at 32.40.

Thanarut Isaragult, a securities fundamental and technical investment analyst at Bualuang Securities, said that stock markets around the world rebounded after the Fed’s latest rate rise. The Fed’s dovish statement supported more market upside, he said.

On a technical view, the SET Index is expected to again test 1,800 points and investors would look for opportunities to the take the market higher on declines in stock prices, he said.

There have been positive technical signs including rebounds in the prices of big-cap stocks in the energy and petrochemical groups ,as well as for mid-cap stocks, following rises in the SET Index, he said.

Thailand’s benchmark index yesterday fell 2.88 points to 1,798.55 at the close of trading. Trading turnover was Bt50.4 billion.

According to Krungsri Securities, the gains the SET Index logged for most of the session yesterday were also driven by export growth of 10.3 per cent year on year in February, a historic high that month in the number of tourist arrivals at 3.56 million, and increases in global crude oil prices after a 2.6-million-barrel reduction in US crude stocks.

We have studied the differing urbanisation rates, household composition and ageing in the Association of Southeast Asian Nations (Asean), plus marriage and fertility rates.

The region is diverse, but urbanisation is accelerating everywhere except in the Philippines. Household composition differs markedly within Asean and this impacts on consumer markets.

Asean trends do not always follow China’s, its households will remain more price-sensitive, even at equal levels of GDP per head. So while ‘trading up’ is a key consumer theme in China, this is much less so in Asean, where city congestion still allows neighbourhood ‘mom and pop’ stores to prosper.

E-commerce does well in markets that are poorly served by shops, have price-sensitive consumers and logistics that allow quick delivery. This applies to large parts of Asean, especially Indonesia.

Asia in general has seen substantial population shifts to urban centres where most employment and wealth are generated. However, Asia’s average urbanisation is estimated at 48 per cent by the United Nations, compared with Europe’s 73 per cent and 82 per cent in North America, leaving scope for further concentration in large parts of Asean.

Urbanisation has been fastest in Malaysia but it fell in the Philippines partly because of the job opportunities created by IT service centres outside the capital. An unusual feature of Asean urbanisation is easy commuting from high-density towns 30km to 50km outside a city centre. Only 12 per cent of Asia’s urban population live in megacities, while 41 per cent live in towns of fewer than 300,000 inhabitants. These small and medium-sized cities often drive economic growth in Asean.

Education affects urbanisation if rural people lack the skills needed for city jobs. And speaking only a local language can inhibit mobility, especially in India.

Hong Kong and Singapore have low dependency ratios because single-person households are prevalent. China’s ratio is low too – the average worker supports only 0.37 other people – reflecting not only the one-child policy, but also high female labour participation.

Thailand and Vietnam also have low dependency ratios while the Philippines has the highest, followed by Cambodia, India and Bangladesh.

Trends in marriage and family formation are other demographic factors. As incomes rise, women tend to have fewer children. Fertility rates are lower and women marry later in developed Asia, particularly in Singapore, Hong Kong, Korea and Japan.

Singapore’s government actively encourages women to have children earlier through cash payments.

Fertility rates in the Philippines, Laos, Cambodia, Indonesia and Vietnam exceed 2.1 births per woman – the level that sustains a population – but rates below 1.5 in Singapore and Thailand mean their populations will decline without immigration.

Fewer births increase the proportion of older people and late marriage means more single-person households, which impacts consumer patterns. But older people have earned and saved so can spend, a key demographic dynamic in Asia.

Asean’s young population spends little on healthcare, but as more people turn 40 this market is likely to grow faster there than elsewhere in Asia – especially in Malaysia and Indonesia, where diabetes is high.

Contributed by HERALD VAN DER LINDE, Head of Equity Strategy, Asia Pacific, HSBC