Asia Stocks Slide After Trump’s Shock Fed Move, Tariff Threats

Asian markets opened in the red on Tuesday, as investors reacted sharply to fresh turbulence from Washington following U.S. President Donald Trump’s surprise dismissal of Federal Reserve Governor Lisa Cook and his renewed threats of sweeping tariffs.

The president claimed Cook was implicated in mortgage fraud, a charge she has denied, vowing to challenge her dismissal in court. The unprecedented action raised alarms about political interference in the independence of the Federal Reserve, an institution traditionally insulated from partisan control. Economists and analysts warned that such moves could erode investor confidence in U.S. monetary policy, triggering uncertainty across global markets.

The immediate fallout was seen across Asia. Japan’s Nikkei 225 index dropped nearly one percent, while South Korea’s Kospi also shed close to one percent. In Hong Kong, the Hang Seng fell by more than one percent, with China’s Shanghai Composite easing slightly. Australia’s ASX 200 lost around 0.4 percent, dragged down by declines in mining, healthcare, and telecoms shares.

Currency and commodities markets also reacted. The U.S. dollar weakened against major currencies, while demand for safe-haven assets rose, pushing gold prices higher. Bond markets reflected shifting expectations, with long-term Treasury yields climbing and short-term yields slipping, a sign that traders are betting heavily on the Fed being forced into rate cuts as early as September.

The sell-off was further fueled by Trump’s renewed tariff warnings. He targeted countries imposing digital taxes or tightening regulations on U.S. technology companies, raising the specter of another round of global trade disputes. The combination of central bank uncertainty and escalating trade rhetoric added to investor unease, prompting sharp movements across equities and currencies.

Market watchers say the episode underscores how fragile global sentiment remains. “Central bank independence is a cornerstone of market stability,” one analyst noted, adding that Trump’s decision has “set off alarm bells everywhere.”

With investors now pricing in a strong likelihood of U.S. rate cuts, attention will remain fixed on the Federal Reserve’s next moves, even as Asian markets continue to absorb the shockwaves from Washington.