Stocks struggle as Trump slaps new tariffs, Fed cut bets unwind

SINGAPORE – Asia shares got off to a shaky start on Friday after US President Donald Trump unveiled a fresh round of punishing tariffs and as traders pared bets of sharp US rate cuts following stronger-than-expected economic data.

Trump on Thursday announced that the US would impose 100% duties on imported branded drugs, 25% tariffs on heavy-duty trucks, and 50% tariffs on kitchen cabinets.

He also said he would start charging a 50% tariff on bathroom vanities and a 30% tariff on upholstered furniture next week, with all the new duties to take effect from October 1.

Japan’s Topix pharmaceutical index slid 1.4% in the wake of the news, while shares of Australian biotech firm CSL tumbled more than 3%.

The Nikkei fell 0.5%, while MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.45%.

“At this point of time, it sort of adds to a bit of a shaky backdrop we’ve got in terms of risk assets,” said Tony Sycamore, a market analyst at IG.

Nasdaq futures were down 0.08% while S&P 500 futures ESc1 dipped 0.02%.

European futures meanwhile eked out gains, with EUROSTOXX 50 futures up 0.37% while FTSE futures rose 0.25%.

Also adding to headwinds for stocks were reduced expectations of aggressive Federal Reserve rate cuts, after a slew of data on Thursday showed the US economy remains in rude health.

“(The) data deluge… gives the US economy a new lease on life,” said economists at Wells Fargo in a note.

“Ultimately the updated GDP figures suggest the US economy was undeniably resilient in the first half of the year despite the on-again off-again approach to US trade policy.”

Traders are pricing in just about 39 basis points worth of rate cuts by December this year, down from over 40 bps earlier this week.

Focus will now be on PCE data due later on Friday, which could provide further clarity on the outlook for rates.

“There was some bullish optimism built into markets, because everybody started thinking we’re going to get somewhere between four and six rate cuts, and now I think we’re probably looking at four at most, and maybe even that seems a bit generous at this point of time into the end of 2026,” said IG’s Sycamore.

While most Fed policymakers continue to strike a cautious tone on the pace of future easing, the central bank’s newest policymaker, Stephen Miran, on Thursday pressed for sharp US interest-rate cuts to prevent labour market collapse.

The reduced expectations of Fed rate cuts have in turn lifted the dollar, which hovered close to the 150 yen level on Friday.

The euro last bought USD 1.1668, having lost 0.6% in the previous session, while sterling was little changed at USD 1.3344.

In commodities, oil prices rose on Friday, with Brent crude futures up 0.24% to USD 69.59 a barrel, while US crude rose 0.43% to USD 65.26 per barrel.

Trump said on Thursday he believes Turkey will agree to his request to stop purchasing Russian oil and that he may lift US sanctions on Ankara so it can buy advanced American F-35 jets, following two hours of talks with Turkey’s President Tayyip Erdogan.

Spot gold edged slightly higher to USD 3,751.69 an ounce.

(Reporting by Rae Wee; Editing by Sam Holmes)