Hang Seng index shed 2.3% on Monday, dragged down by heavy losses in major Chinese internet and technology firms

Asian stock markets dropped in a broad-based sell-off on Monday, with Hong Kong’s tech-heavy index leading declines, as new U.S. tariff talks and retaliation threats from Beijing reignited trade war fears and undermined investor confidence.

Trump on Sunday appeared to soften his tone, writing on Truth Social, “Don’t worry about China, it will all be fine.”

The reassurance helped lift U.S. stock futures in early Asian trading, but regional equities remained under pressure as investors awaited updates on de-escalation.

Hang Seng index shed 2.3% on Monday, dragged down by heavy losses in major Chinese internet and technology firms.

The Hang Seng TECH index declined more than 2%, with heavyweights such as Alibaba and Tencent declining.

Mainland Chinese markets also weakened, with the blue-chip Shanghai Shenzhen CSI 300 and Shanghai Composite each down nearly 1%.

Trump on Friday announced plans to impose an additional 100% tariff on all of China’s U.S.-bound exports, in response to China curbing its critical mineral exports. Trump also plans to impose new export controls on certain U.S.-made software deemed critical to national security.

The news affected stock markets and sparked fears of a slowdown in regional exports.

China’s Commerce Ministry responded over the weekend, saying the country “does not want a trade war but is not afraid of one,” and warned of “appropriate countermeasures” should the U.S. proceed with the planned tariff hikes.

The ministry also accused Washington of adopting “double standards” in its trade policy.

Japanese markets were closed for a public holiday, while other regional stocks dropped amid tariff concerns.

However, futures tied to Nikkei 225 jumped nearly 1.5% on Monday as the yen weakened after Sanae Takaichi’s bid to become Japan’s prime minister faced a setback last week as her coalition partner withdrew.

KOSPI slid 1.3%. S&P/ASX 200 dropped 0.6%, while Straits Times Index slipped 1%.