Asian stock markets experienced a significant decline on Monday, fueled by the ongoing turbulence from U.S. President Donald Trump’s trade war and China’s strong retaliatory measures against unexpectedly high tariffs.

The Nikkei 225, Japan’s main stock index, plunged more than 8% shortly after the market opened, with the broader Topix index trading down over 6.5% after an attempt to recover from its steepest losses.

In mainland China, markets reopened after a public holiday, revealing a nearly 6.7% drop in the Shanghai Composite Index and a 7.5% slide in the blue-chip CSI300 index. Hong Kong’s Hang Seng Index also took a heavy hit, opening more than 9% lower.

South Korea’s Kospi index fell more than 4.8%, prompting a five-minute trading halt as panic selling triggered a circuit breaker.

These staggering losses came as Asian markets mirrored Wall Street’s worst two-day performance in five years, following a sell-off that erased more than $5.4 trillion in market value. U.S. stock futures indicated further declines on Sunday night after a sharp drop on Friday, spurred by China’s fierce retaliation, which included imposing a 34% tariff on all U.S. goods.

This escalation heightened fears of a damaging trade war as tensions continue to rise between the world’s two largest economies.

In a commentary published by the People’s Daily, the official newspaper of the Chinese Communist Party, it was emphasized that China has the “strong capacity to withstand the pressure” posed by the tariffs, framing the situation as a response to “U.S. tariff bullying.”

The global investor community grows increasingly concerned about Trump’s hefty tariff strategies, with anticipations of further retaliatory measures from other nations in the near future.

Chief Market Strategist at Lazard, Ronald Temple, expressed in a research note that the economic repercussions of these tariff increases could be more damaging than if they had escalated gradually.

In Taiwan, the Taiex index suffered a notable drop of over 9.7%, with major companies like TSMC and Foxconn triggering automatic circuit breakers as they fell approximately 10%. Australia’s ASX 200 index dropped by as much as 6.3%, while New Zealand’s NZX 50 lost over 3.5%.

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As the markets brace for a potentially dire economic outlook, President Trump has downplayed concerns, asserting that he did not intend to crash the markets. He noted that while he cannot predict future market trends, the strength of the U.S. economy is improving.

Japanese Prime Minister Shigeru Ishiba has pledged to continue lobbying the U.S. to reduce tariffs, particularly amidst the newly imposed 24% tariff on Japan, which is set to take effect soon.

Taiwan’s President Lai Ching-te has stated intentions to negotiate with the U.S. to alleviate tariffs and has expressed Taiwan’s commitment to purchasing more American products.

Economists have started to adopt a cautious stance, adjusting their growth forecasts for the region as the prospect of successful negotiations with the U.S. appears uncertain.

This report has been updated with additional information and analysis on the unfolding situation.