Asian markets today: China feels even more difficult with higher tariffs

The rout of Wall Street has spread to Asia on Tuesday. From Hong Kong Hang Seng (HSI) fell 2% in morning trading, while Japan Nikkei (N225) was down about 1%. South Korea KOSPI (KOSPI) and the Composite of Shanghai (SHCOMP) were mostly flat.

Investors around the world fear a protracted trade war in which the United States and China continue to raise their tariffs. US companies importing Chinese goods pay US tariffs. Companies eat this cost, which reduces their profits; or they pass on the costs to consumers, which can affect the demand for their products.

"It's a self-inflicted injury that will be catastrophic for the country's economy," said Rick Helfenbein, director of the American Apparel and Footwear Association. The tariffs "are taxes on American consumers that result in higher prices, falling sales and job losses," he added.

Meanwhile, China is fighting to fight.

Foreign Ministry spokesman Geng Shuang said on Monday that China would never give in to external pressure. hours before Beijing announces its latest set of tariffs.

Analysts believe markets need to start re-thinking to reflect the new geopolitical reality.

"Even if an agreement is signed next week, it is now clear to us that Sino-US relations will last for decades," analysts of brokerage firm Jefferies wrote in a note to the client.

"While China's economic and geopolitical growth is hurting US interests, the eleventh-hour negotiations and brinkmanship will be a recurring theme on which markets will learn to integrate the price," they said.