SYDNEY—Asian shares slipped on Monday as a mixed bag of Chinese economic data showed the domestic economy was struggling even as US tariffs began to bite into exports, while the White House kept up its rhetorical pressure on trade partners.
Wall Street share futures also slipped with the dollar, while Treasury yields rose as concerns about erratic US economic policies were underlined by Moody’s downgrade of the country’s credit rating.
Unease over the United States’ $36 trillion of debt has also mounted as Republicans seek to approve a sweeping package of tax cuts, which some estimate could add $3 trillion to $5 trillion in new debt over the next decade.
US Treasury Secretary Scott Bessent used television interviews on Sunday to dismiss the downgrade, while warning trade partners they would be hit with maximum tariffs if they did not offer deals in “good faith”.
Bessent is off to a G7 meeting this week for more talks, while US Vice President JD Vance and European Commission President Ursula von der Leyen met on Sunday to discuss trade.
“It remains to be seen whether the 10 percent reciprocal rate – excluding Canada and Mexico – will broadly remain, or will go up or down for some countries,” said JPMorgan economist Michael Feroli, who estimates the current effective tariff of around 13 percent was equal to a tax rise worth 1.2 percent of GDP.
“Beyond disruptions from higher tariffs themselves, policy uncertainty should additionally weigh on growth.”
The tariff war has weighed heavily on consumer sentiment and analysts will be scouring earnings from Home Depot and Target this week for an update on spending trends.
In markets, MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2 percent, with Japan’s Nikkei down 0.6 percent.
Chinese blue chips eased 0.4 percent as retail sales missed forecasts for April, while industrial output slowed but not by as much as feared.
EUROSTOXX 50 futures added 0.1 percent, while FTSE futures eased 0.1 percent and DAX futures were flat.
