SINGAPORE — Markets in Asia-Pacific were subdued in Tuesday trading, as investors weighed a possible thawing of U.S.-China trade relations as U.S. President Joe Biden floated the idea of tariff cuts on Chinese goods.
Chinese stocks were little changed in early trade. Hong Kong’s Hang Seng index was 0.43%. The Shanghai Composite was flat, while the Shenzhen Component declined 0.35%.
In Japan, the Nikkei 225 was down 0.42%, while the Topix was lower by 0.34%.
Japan’s manufacturing activity for May increased at the slowest pace in three months, as supply bottlenecks caused output to slow, according to Reuters.
In corporate news, Toyota Motor said Tuesday it will cut global production by around 100,000 to 850,000 in June, due to the semiconductor shortage. Shares of the Japanese automaker were up 0.29% in the morning.
South Korea’s Kospi was down 0.8%.
In Australia, the S&P/ASX 200 sat just above the flatline. MSCI’s broadest index of Asia-Pacific shares outside Japan was lower by 0.43%.
As consumer prices heated up, the White House had said last month that it was looking at how those tariffs have contributed to inflation.
Those tariffs took effect in 2018 when the Trump administration imposed tariffs on billions of dollars worth of Chinese goods and Beijing retaliated with similar punitive measures, drawing both sides into a protracted trade war.
“Markets seemed to take the news as indicative of a potential thawing of US-China trade tensions, though it isn’t the first time tariff reductions have been floated,” wrote Taylor Nugent, an economist at the National Australia Bank. “While a cut to tariffs would help soften US inflation at the margin, reports suggest administration officials are concerned about appearing soft on China ahead of November congressional elections.”
In other trade news, the U.S. announced on Monday the Indo-Pacific Economic Framework with Asian partners including Australia, Japan and South Korea. The group wants to set international rules on the digital economy, supply chains, decarbonization and regulations applying to workers.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 102.296 — rising from levels just above 102 earlier.
— CNBC’s Ted Kemp contributed to this report.