Asia shares experienced a decline in Monday trading amidst concerns over President Donald Trump’s potential imposition of tariffs on key U.S. trading partners. Major Asian markets such as Japan’s Nikkei 225, Australia’s S&P/ASX 200, and South Korea’s Kospi all recorded losses, reflecting the apprehension surrounding a possible trade war escalation. Analysts highlighted the potential consequences of trade restrictions, including reduced global trade flows, supply chain disruptions leading to increased costs for businesses, and higher inflation.

On Wall Street, the previous week concluded with the S&P 500 and Nasdaq composite posting losses, marking their first weekly decline in three weeks. The Dow Jones Industrial Average also fell, reflecting a broader sell-off with technology and energy companies notably contributing to the downturn. The market was further impacted by revelations from Chinese company DeepSeek about a cost-effective large language model, casting doubt on the necessity of extensive investments in AI chips and causing certain technology stocks to plummet.

As Trump’s tariffs on imports from Canada, Mexico, and China loom, uncertainties persist regarding the conditions for their potential removal. Canada and Mexico have retaliated with their own tariffs on American goods, adding to the trade tensions. Additionally, long-term bond yields, including the 10-year Treasury, saw an increase as economic indicators remained robust, despite the Federal Reserve maintaining a steady interest rate. Energy trading saw a rise in crude oil prices, while currency markets witnessed fluctuations with the U.S. dollar strengthening against the Japanese yen and the euro.