HONG KONG — Asia-Pacific equity markets closed a fractured trading session on Tuesday, February 24, 2026, with semiconductor-driven gains in South Korea and Taiwan pulling sharply against weakness in Hong Kong and a broader technology sector gripped by artificial-intelligence disruption fears, as fresh tariff warnings from U.S. President Donald Trump added another layer of uncertainty for investors already navigating a rapidly shifting global trade landscape.

Trump's Tariff Warning Reverberates Across Global Markets

The immediate catalyst for Tuesday's cautious mood across much of the region was a Truth Social post published by Trump on Monday that warned trading partners against exploiting a landmark U.S. Supreme Court ruling that had invalidated the legal foundation for his signature tariff program. In the post, Trump declared that any nation seeking to use the ruling as leverage in ongoing trade negotiations would face substantially higher duties than those already on the table. The warning followed a 6-3 decision by the Supreme Court on Friday, February 20, which ruled that tariffs imposed under the International Emergency Economic Powers Act exceeded the president's statutory authority, dealing a significant blow to the trade policy that had defined much of Trump's second term.

Trump moved quickly in the immediate aftermath of that ruling to preserve his tariff architecture. He signed an executive order imposing a 10 percent global tariff under Section 122 of the Trade Act of 1974, a separate statutory authority that allows a president to levy temporary duties for up to 150 days. By Saturday, February 21, Trump had escalated that figure to 15 percent, the ceiling permitted under Section 122, effective from 12:01 a.m. Eastern Time on February 24. The rapid sequence of actions sent stocks lower on Wall Street on Monday, with the Dow Jones Industrial Average shedding 1.66 percent, the S&P 500 declining 1.04 percent, and the Nasdaq Composite falling 1.13 percent. Those losses set a cautious tone that carried over into Asian trading on Tuesday morning.

China's Rate Decision Signals Policy Patience

Investors in the region also absorbed a widely anticipated monetary policy decision from the People's Bank of China, which held its benchmark lending rates unchanged for the ninth consecutive month on Tuesday. The one-year loan prime rate, which serves as the reference rate for the vast majority of new corporate and household loans in China, remained at 3.0 percent. The five-year loan prime rate, which anchors mortgage pricing across the country, was left steady at 3.5 percent. The outcome was in line with the expectations of most market participants and reinforced the perception that Beijing is in a holding pattern on monetary easing, choosing stability over stimulus as the yuan continues to strengthen against the dollar.

The steady rate decision came as mainland Chinese markets reopened for the first full trading session following the Lunar New Year holiday, with the Shanghai and Shenzhen exchanges registering a collective gain of approximately 1.33 percent. The holiday-fueled return brought a measure of optimism to domestic investors who had tracked the Supreme Court ruling from the sidelines, though analysts noted that the tariff picture for Chinese exporters remained complicated even after the ruling. While the court's decision implied a net reduction in the effective tariff burden on Chinese goods, the new Section 122 duties and the threat of further escalation under separate legal mechanisms left significant uncertainty hanging over the trade relationship. China's fourth-quarter economic growth came in at 4.5 percent year on year, its weakest quarterly pace since the lifting of pandemic restrictions, adding to the backdrop of subdued domestic momentum.

South Korea and Taiwan Lead Asian Gains on Chip Rally

South Korea's Kospi index rose 1.81 percent on Tuesday, reaching a fresh record high for the third consecutive session and consolidating what has become one of the most durable equity rallies in the Asia-Pacific region over recent months. The advance was powered by a semiconductor-focused rally that lifted the index's largest components, as investors rotated toward hardware names that benefit from sustained global demand for advanced chips. The small-cap Kosdaq, which contains a higher proportion of early-stage technology companies, added 0.73 percent. The momentum in Korean equities reflects the broader investor thesis that the proliferation of artificial intelligence infrastructure spending globally will continue to support chipmakers at the leading edge of the supply chain, even as that same AI-driven demand disrupts software vendors downstream.

Taiwan's market told a similar story. The Taiwan Weighted Index advanced 2.59 percent, leading Asian markets for the session and extending its outperformance relative to regional peers. Taiwan Semiconductor Manufacturing Company, the world's dominant contract chipmaker, rose more than 3.68 percent on a day when demand for exposure to the AI infrastructure theme was clearly prioritized over concerns about the tariff environment. TSMC's gains underscored a key dynamic in the technology investment landscape: the same wave of AI spending that is threatening to displace traditional enterprise software vendors is simultaneously driving unprecedented capacity orders at semiconductor foundries and equipment suppliers. Japan's Nikkei 225 gained a more modest 0.94 percent, while the broader Topix index finished marginally in negative territory, suggesting that the session's gains were concentrated in technology-related names rather than broadly distributed across the market.

Hong Kong's Hang Seng Index closed down 1.93 percent on Tuesday, emerging as the weakest major market in the region for the session and underscoring the divergence between hardware beneficiaries and software or consumer-facing technology companies. Healthcare stocks were among the largest drags on the index. Labubu toy maker Pop Mart, one of the Hang Seng's more prominent consumer discretionary names, was the index's largest single-session loser, shedding 5.39 percent after releasing a new product series on Monday that failed to generate the investor enthusiasm some had anticipated. The broader selloff in Hong Kong reflected both the tariff uncertainty specific to the China-linked economy and the ongoing reassessment of consumer and technology valuations that has characterized global markets since early February.

The technology sector selloff extends well beyond Hong Kong. A wider reckoning is under way across enterprise software names globally as investors recalibrate their assumptions about the rate at which artificial intelligence agents will displace the kind of seat-based, subscription-licensed applications that have been the cornerstone of the software-as-a-service industry for more than a decade. The concern, which has intensified through the first two months of 2026, is that AI-powered productivity tools can replicate a growing proportion of the workflow that enterprise customers currently manage through platforms like project management, document automation, and data analytics software. Short interest in enterprise software stocks has reached elevated levels as a consequence, and price-to-sales multiples across the sector have compressed materially from their recent peaks. Australia's S&P/ASX 200 gave back earlier gains to finish down 0.1 percent, reflecting the cautious overall tone.

Investors Weigh Legal Risk as the 150-Day Clock Begins

With the Section 122 tariffs now in force as of February 24, the next focal point for markets is the statutory limit attached to the authority. The Trade Act of 1974 permits tariffs imposed under Section 122 to remain in effect for 150 days without congressional approval, meaning the current 15 percent global duty is scheduled to require legislative extension by approximately late July 2026 unless lawmakers act sooner. Treasury Secretary Scott Bessent has stated publicly that the administration's pivot to alternative legal authorities will result in tariff revenues that are, in his estimation, effectively unchanged relative to the prior IEEPA-based regime. That claim remains contested among trade economists, with analysts at Goldman Sachs estimating a net reduction of approximately five percentage points in the effective tariff rate applied to Chinese goods following the Supreme Court ruling. The European Union, for its part, postponed a vote to ratify its trade agreement with the United States, citing the need for clarity on the direction of American trade policy before proceeding.

For investors in Asia-Pacific markets, the core challenge is pricing a policy environment in which the legal basis for tariffs can shift within days. The range of outcomes, from a de-escalation of trade tensions to a new round of escalatory measures under authorities that remain legally intact, is wide enough to make consensus forecasting difficult. Semiconductor and chipmaking names have so far proven the most resilient, insulated by the structural demand surge tied to AI infrastructure. Broader technology, consumer, and export-sensitive names remain far more exposed to the next development in what has become one of the most consequential trade policy upheavals in decades.

Written by Nick Ravenshade for NENC Media Group, original article and analysis.