HONG KONG (Nikkei Markets) -- Asian shares outside of Japan fell Tuesday after President Donald Trump imposed tariffs on two South American countries, prompting investors to reassess the outlook for an interim trade deal between the U.S. and China.
The Nikkei Asia300 Index slid 0.2% to 1,300.35.
The losses on the gauge came after the S&P 500 Index yesterday fell by the most in two months. Data that indicated contraction in U.S. manufacturing activity and renewed trade worries dimmed the appetite for risk assets.
Trump said on Twitter yesterday that he is restoring tariffs on all steel and aluminum shipments from Brazil and Argentina effective immediately. He accused both the countries of having presided "over a massive devaluation of their currencies."
In more negative trade news, the U.S. threatened tariffs on $2.4 billion of imports from France after concluding that the European nation's new digital services tax would harm U.S. technology companies, Reuters reported.
"The U.S. show of force on tariffs is as much a message to China as it is to the countries affected," ING Bank said in a note. "It says, tariffs are still a weapon we can use if you don't sign a deal."
The U.S. and China are attempting to reach a trade deal before a Dec. 15 deadline when more Chinese goods could be subject to tariffs, further worsening the ongoing trade war. U.S. Commerce Secretary Wilbur Ross yesterday indicated that the U.S. could go ahead with the Dec. 15 tariffs if a trade deal is not reached by then.
Meanwhile, a closely watched U.S. manufacturing gauge indicated that factory activity in the world's largest activity continued to contract. The ISM Manufacturing Index posted a reading of 48.1 for November, down from 48.3 in the previous month.
Among movers on the A300 on Tuesday, Hong Kong-listed Chinese jewelry retailers Chow Tai Fook Jewellery Group and Luk Fook Holdings International dropped 2.2% and 2.8%, respectively. Data released on Monday showed Hong Kong's retail sales by value slumped 24.3% in October from a year ago. The drop came amid an ongoing political crisis in the city that has affected tourist arrivals and weighed on the retail sector.
China Vanke dropped 0.3%. The Chinese property developer reported a 6.5% year-on-year decline in November contracted sales.