HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan recouped early losses to end higher on Tuesday, as investors digested a U.S. move to impose additional tariffs on shipments from China and a threat for more levies covering all imports from the mainland.
The Nikkei Asia300 Index added 0.2% to 1,280.32. The gauge slipped as much as 0.6% earlier in the day. On Monday, the U.S. said it will impose tariffs on $200 billion of Chinese goods imported into the country at the rate of 10%, lower than the 25% rate the government had said it was considering. The levy, which takes effect on Sept. 24, will be raised to 25% next year, the U.S. government said.
President Donald Trump said the U.S. will immediately pursue tariffs on additional imports of about $267 billion if China takes retaliatory action. Shortly after China's equity markets closed, the Ministry of Commerce said it has no option but to take "counter measures" to safeguard its rights and global free trade order, without specifying the nature of those measures or a timeline for implementing them.
The U.S. and China have already introduced tariffs on $50 billion of goods they import from each other.
"It seems as if the latest tariff announcement was largely priced in, but what remains uncertain is how Beijing policymakers will respond," Hussein Sayed, chief market strategist at FXTM, wrote in a note. "While China cannot match the U.S. tariffs dollar for dollar given the huge trade imbalance, it still has other weapons it could use, including boycotting U.S. products, increasing taxes on earnings of U.S. companies in China, refusing to grant approvals for M&A involving U.S. businesses" and reducing its U.S. debt holdings, Sayed added.
He said investors should be prepared for more short-term downside risks across equity markets.
Apple suppliers listed in Taiwan declined although smart watches, such as those made by the company, were excluded from the final list of goods on which the levies would be applied. Taiwan Semiconductor Manufacturing Co. (TSMC), Hon Hai Precision Industry, and Largan Precision slid 1.4%, 2.6%, and 9.9%, respectively.
Hong Kong-based clothing retailer Li & Fung slid 2.6% to HK$1.90, its lowest closing level since August 1999. The company supplies clothing to retailers across the world including Nike and Walmart, and has previously said the trade war could cause brands to be more cautious while placing orders in the second half of the year.
CapitaLand slipped 0.3% in Singapore. The company on Tuesday said its unit agreed to buy 16 properties in the U.S. for a total of $835 million.
Axiata Group fell 0.2% in Kuala Lumpur. The company's infrastructure unit edotco Group on Monday said it has scrapped plan to acquire 13,000 telecommunication towers from Pakistan Mobile Communications in Pakistan.
Tata Motors fell 3.4% in Mumbai. The company's British luxury unit Jaguar Land Rover said it has cut down production schedules at a plant in the U.K. starting next month, citing the uncertainty surrounding Britain's exit from the European Union.