Global Fallout from Trump’s Trade War
Australian and Asian markets tumbled as Trump’s tariffs took effect. The ASX 200 fell 1.8%, the All Ordinaries lost 1.9%, erasing $48 billion in value.
The Shanghai Composite rose 1.3%, while the Hang Seng gained 0.4% as China condemned the tariffs.
“The US continues to abuse tariffs to pressure China,” Chinese foreign ministry spokesperson Lin Jian said. “China firmly opposes this and will never accept this kind of bullying.”
Japan’s Nikkei dropped nearly 4%, while US Treasury yields rose as investors sought safety.
“This is beyond fundamentals right now. This is about liquidity,” ANZ senior strategist Jack Chambers said.
Also Read: 3D Scan Uncovers Titanic’s Final Moments with Striking Clarity
Trump’s Tariffs Hit Aussie Industries Hard
Trump’s 104% tariff on Chinese imports has sent shockwaves through Australian trade and investment.
The S&P/ASX 200 lost over $40 billion in value on Wednesday. Mining and energy stocks took the biggest hit.
- Rio Tinto: Down more than 5%
- Woodside Energy: Down almost 4%
- CSL (biotech giant): Down more than 5%
- Neuren Pharmaceuticals: Down more than 5%
- Botanix (dermatological company): Down more than 9%
RBA May Hold Emergency Meeting Amid Market Chaos
The Reserve Bank of Australia (RBA) may call an early interest rate meeting to tackle the fallout from Donald Trump’s extreme tariffs.
The board was set to meet on May 19-20, but economic turbulence may force action sooner. Economist and Yahoo Finance contributor Stephen Koukoulas believes the RBA should act early.
“Not sure why an off-calendar RBA meeting is catastrophised as an ’emergency’,” Koukoulas said. “It would be prudent. Easier policy is needed as the growth fallout is obvious.”
Markets Crumble as ASX Takes Another Hit
The ASX 200 has struggled this week, battered by Trump’s tariff policies. On Wednesday, the ASX fell 1.8%, wiping out more than $50 billion in minutes.
The index opened at 7,370.30, dropping sharply before slightly recovering to 7,390.50. This marks the second major decline in a week, with Australia’s stock market now down for four of the last five sessions.
The Australian dollar also remains weak, hovering around 60 US cents, its lowest since March 2020.
Also Read: Challenger Gold Doubles Ecuador Resource to 9.1 Million Ounces Gold Equivalent
Government Stands Firm, Opposition Sounds Alarm
Treasurer Jim Chalmers met with the heads of ANZ, NAB, Westpac, Commonwealth Bank, and RBA Governor Michele Bullock on Tuesday.
“We’re working closely with regulators and financial institutions to ensure that everything possible is being done to safeguard Australians,” Chalmers said.
Opposition Leader Peter Dutton warned that Australia was heading toward a recession “under Labor,” but Chalmers dismissed the claim as “reckless.”
Prime Minister Anthony Albanese highlighted Australia’s trade relationships beyond the US.
“80 per cent of world trade does not involve the United States,” Albanese said. “There’s enormous opportunities for Australia… Building our relationship with India. Continuing to build on our economic relationship with China.”
RBA Could Be ‘Forced’ Into Rate Cuts
Chalmers’ discussion with RBA Governor Bullock could lead to an early interest rate cut. The central bank is closely monitoring the situation, a spokesperson told Yahoo Finance.
Koukoulas argued that “because of the obviously negative effect on Australia,” the RBA should use Section 25AN of the RBA Act to cut interest rates immediately.
The RBA has previously acted outside its scheduled meetings, including during the Global Financial Crisis and the pandemic. Greens Senator Nick McKim supports an early meeting.
“People are hurting already, and every week of delay increases the risk of a recession,” McKim said.
Homeowners Could Benefit from Tariff Fallout
If the RBA delays action, a significant rate cut could arrive in May.
ANZ head of Australian economics Adam Boyton suggested a 50-basis-point cut is possible if sentiment worsens.
Financial markets now see a 100% chance of a rate cut in May, with at least four expected this year.
A four-cut cycle would reduce repayments on a $600,000 mortgage at 6.05% interest by $359 per month, or $4,308 per year.
However, billionaire Gerry Harvey is unconvinced.
“I don’t think we should be cutting interest rates just yet,” he told The Australian.
“Losing confidence can spread like wildfire and if that happens we’re in the shit and that could lead to a recession.”
Big Four Banks Predict Interest Rate Cuts
All of Australia’s major banks anticipate rate cuts starting in May.
- CBA: Three cuts in May, August, November (cash rate: 3.35%)
- Westpac: Three cuts in May, August, November (cash rate: 3.35%)
- NAB: Four cuts, one in early 2026 (cash rate: 3.1%)
- ANZ: Three cuts in May, July, August (cash rate: 3.35%)
Economists Warn of Long-Term Economic Pain
IG analysts warned of severe risks to Australia’s economy if China retaliates.
“If China does dig in, tariffs on its imports to the US will rise to a staggering 104%, a dire outcome for Australia’s trade-dependent economy,” they said.
Commonwealth Bank chief economist Luke Yeaman said Australia is “relatively well-placed” but remains vulnerable to global shocks.
Over the past week, stock markets have fluctuated based on Trump’s trade policies.
The Australian dollar, which is heavily tied to China’s economy, remains weak, making overseas travel and imported goods more expensive.
What Happens Next?
The world’s two biggest economies are now locked in a fierce trade war.
With Australia caught in the crossfire, the RBA may be forced to intervene before its scheduled meeting.
If China retaliates with counter-tariffs, Australian markets could face further turmoil.
For now, all eyes are on the RBA, the government, and global markets as the fallout from Trump’s tariffs continues.
