Trump signed a presidential memorandum on Thursday that could impose tariffs on up to $60 billion of imports from China, although the measures have a 30-day consultation period.
Investors fear that the U.S. measures could escalate into a trade war, with potentially dire consequences for the global economy.
Beijing urged the United States on Friday to “pull back from the brink”.
“China doesn’t hope to be in a trade war, but is not afraid of engaging in one,” the Chinese commerce ministry said in a statement.
China unveiled its own plans on Friday to impose tariffs on up to $3 billion of U.S. imports in retaliation against U.S. tariffs on Chinese steel and aluminum products.
MSCI broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 2.2 percent as stocks across the region dropped.
Shanghai shares .SSE were down 3.3 percent.
“The economic impact on both China and the U.S. will be determined by what form the tariffs end up taking. The effects are likely to be felt more strongly in the U.S. and will increase both consumer and producer prices,” wrote Hannah Anderson, global market strategist at J.P. Morgan Asset Management.
“The equity market will bear the brunt of the market reaction. Most impacted will be the U.S., Korea, and Taiwan as companies domiciled in these markets make up a significant portion of the global production chain of Chinese exports.”
Australian stocks lost 2.1 percent and Japan's Nikkei .N225 dropped 4.1 percent. Hong Kong's Hang Sen .HIS was down 2.8 percent, Taiwan shares .TWILIT slid 1.7 percent and South Korea's KOPS .KS11 retreated 2.3 percent.
“A possible trade war between the United States and China is especially serious for the South Korean economy as it could directly or indirectly affect the country’s trade with them as well,” said Se Sang-young, an analyst at Kiwoom Securities.
Setting a downbeat tone for Asia, the Dow .DJI on Thursday shed 2.9 percent, the S&P 500 .SPX dropped 2.5 percent and the Nasdaq .IXIC fell 2.4 percent.
-Source: News Agency
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