Investing.com-- Asian stock tumbled on Wednesday after temporary relief in the previous season, as U.S. President Donald Trump escalated global trade tensions by increasing tariffs on China to a whopping 104%.

Japan and Hong Kong stocks led the declines, while other indexes also fell, with South Korea’s KOSPI on track to enter bear market territory.

For the day, investors await the Reserve Bank of India’s interest rate decision due later in the day.

Major U.S stock indexes closed sharply lower on Tuesday, with the S&P 500 closing below 5,000 points for the first time in nearly a year. Futures tied to these benchmark indexes slipped in Asian trading on Wednesday.

Trump escalates trade tensions with China; Hong Kong stocks drop 2%

President Trump further escalated tensions with Beijing on Wednesday.

He signed an executive order raising reciprocal tariffs on China to 84%, up from the 34% announced on April 2. With 20% in existing duties already in place, the total tariffs on Chinese goods now amount to 104%.

These tariffs, along with other nation-specific reciprocal duties, were set to take effect later in the day at 04:00 GMT.

A day earlier, China had said it would "fight to the end" and implement countermeasures if the U.S. moved ahead with the new tariff threats.

The tit-for-tat tariff action between the world’s two largest economies stoked fears of a deeper slowdown in global trade.

However, Chinese shares were largely unchanged, a day after several Chinese state-owned funds pledged to boost equity investments, to stabilize markets rattled by U.S. tariff tensions.

China’s central bank said Tuesday it supported state-owned Central Huijin Investment in boosting its holdings of index funds and will offer re-lending support if needed to help stabilize markets.

The blue-chip Shanghai Shenzhen CSI 300 was largely muted, while the Shanghai Composite ticked down 0.2%.

Hong Kong’s Hang Seng slipped more than 2%, with losses in technology and automobile stocks

Japan’s Nikkei slumps 3%, S. Korea’s KOSPI heads for bear market

Japan’s Nikkei 225 led losses with a 3% drop after rebounding in the previous session

The broader TOPIX index also fell more than 2%.

South Korea’s KOSPI declined 1% on Wednesday, down 20% from its recent record high of 2,896.43 points hit in July 2024.

A bear market is a term used in financial markets when an index falls 20% or more from a recent high for a sustained period of time.

Australia’s S&P/ASX 200 fell 1.2%, while Singapore’s Straits Times Index dropped 1.8%.

Futures for India’s Nifty 50 fell 0.4% ahead of RBI’s interest rate decision, where a 25 basis point cut is widely expected.