‘Reality Check’: ASX falls on Trump’s Tariffs on Tuesday

The ASX200’s three day winning streak came to an end on Tuesday, as markets digested President-elect Donald Trump’s announcement on US tariffs.

The Australian sharemarket retreated from its record close on Monday following the latest developments in Donald Trump’s trade war.

The benchmark ASX 200 index on Tuesday fell by 58.20 points, or 0.69 per cent, to finish the session at 8359.40 points.

The broader All Ordinaries fell by 48.60 points or 0.56 per cent to close on Tuesday at 8612.60.

The Australian dollar fell to 64.9 US cents.

ASX snaps three day winning streak as Donald Trump doubles down on trade sanctions on China. Generic ASX. Picture: NewsWire / Christian Gilles

The Australian sharemarket reacted negatively to Mr Trump’s announcement via his own social media platform that he would introduce an additional 10 per cent tariff on Chinese imports and 25 per cent tariffs on goods from Canada and Mexico, effective from his first day in office.

While the news was an election promise of Mr Trump, markets took the nomination of billionaire Scott Bessent for Treasury secretary as a sign that the incoming President was walking away from some restrictions on China.

Capital.com senior financial market analyst Kyle Rodda said Tuesday was a reminder to investors that markets would be dictated by comments on social media again, like it was in 2016 during Mr Trump’s first term.

“It was a bit of a reality check. This was sending a signal to markets that [Trump] is pretty committed to his pro-tariffs, pro-trade war agenda,” Mr Rodda said.

The weakness in trade also spread across the Asian markets with Japan’s Nikkei taking a bigger hit of 1.5 per cent, while Chinese markets were mixed with a modest fall in Shenzen, flat trade in Shanghai and a modest rise in Hong Kong.

On the local market, falls in energy, financials and materials, outweighed gains from consumer staples, IT, healthcare and real estate.

Healthcare providers Life360 and Healius Limited were the top two performing stocks on the ASX rising 6.8 and 5.9 per cent respectively, while former market darling Domino’s Pizza rose 4.15 per cent.

BlueScope Steel was also among the best performing shares on the Australian market rising by 5.52 per cent to close the day out at $22.43 as the markets see it as a benefactor of the Trump tariff stance. BlueScope sources about 40 per cent of its revenue from the US and thanks to its NorthStar BlueScope Steel business in Delta Ohio it is likely to trade without US tariffs.

There were some benefactors from the Trump tariffs including BlueScope Steel. Picture Newswire/ Gaye Gerard.

“BlueScope Steel is probably the best anti-trade war stock locally, as any Australian politician will sell it we have a trade deficit with the United States. Not only that, if there is some kind of curb on steel in other parts of the world, especially China, then Australia stands to benefit from better bilateral relations,” Mr Rodda said.

The big banks have fallen as APRA’s decision on Monday to maintain the mortgage serviceability buffer of 3 per cent, despite the Reserve Bank likely to reduce interest rates in the coming months.

CBA fell 3.6 per cent, ANZ lost 1.67 per cent, Westpac fell 1.38 per cent and NAB 1.19 per cent.

Originally published as ‘Reality Check’: ASX falls on Trump’s Tariffs on Tuesday