HONG KONG —
Asia-Pacific stocks were mixed on Tuesday as investors weighed renewed tariff threats from U.S. President Donald Trump and mounting concerns that artificial intelligence could upend the software and cybersecurity business models that have powered a multi‑year tech rally. In China, benchmark lending rates were left steady, offering few surprises as mainland markets reopened after the Lunar New Year break.
Tariff shock after Supreme Court ruling
Global risk appetite has been jolted since Friday, when the U.S. Supreme Court ruled 6–3 that the International Emergency Economic Powers Act (IEEPA) does not authorize a president to impose broad peacetime tariffs, curtailing a key legal foundation for Trump’s earlier duties. The case, Learning Resources v. Trump, limits the use of emergency economic powers for revenue‑raising measures and underscores that Congress, not the White House, holds primary constitutional authority over tariff policy.
Within hours of the ruling, the White House pivoted to Section 122 of the 1974 Trade Act, a rarely used balance‑of‑payments tool that allows the president to impose temporary, across‑the‑board import surcharges. The provision caps such measures at 15% for up to 150 days unless Congress extends them. Over the weekend, the administration raised a newly announced global surcharge from 10% to 15%, set to take effect on February 24, in an effort to preserve negotiating leverage while staying within the stricter legal boundaries set by the Court.
Trump amplified the warning in a post on Truth Social on Monday, February 23, writing that any country that wants to “play games” with the Supreme Court decision “will be met with a much higher tariff.” The public threat signaled to trading partners that Washington intends to keep tariffs central to its economic statecraft even as its legal toolkit narrows.
Any Country that wants to “play games” with the ridiculous supreme court decision … will be met with a much higher Tariff, and worse.
Trade lawyers note that Section 122’s design is narrow: it requires a balance‑of‑payments justification, imposes a hard 150‑day limit, and caps the surcharge at 15%, with any extension requiring an act of Congress. Those constraints, plus questions over country and product exemptions, set the stage for fresh litigation, intense lobbying and months of compliance work for importers and customs brokers. The provision, set out in Section 122 of the Trade Act of 1974, was drafted for temporary crisis management rather than open‑ended industrial policy, a distinction now front and center for lawmakers and trading partners.
China holds rates steady as markets reopen
China’s Loan Prime Rate was left unchanged on Tuesday at 3.0% for the one‑year tenor and 3.5% for the over‑five‑year benchmark, which anchors most new mortgages. The steady print extended an eight‑month hold and underscored Beijing’s reliance on targeted fiscal and credit tools while it tries to stabilise a weak property sector, support consumption and avoid further downward pressure on the renminbi.
Mainland equities rose as onshore traders returned from the holidays, while Hong Kong’s Hang Seng slipped, dragged by health‑care names. Shares of Pop Mart, the Labubu toymaker, were among the session’s laggards after unveiling a new series, reflecting the market’s sensitivity to consumer‑trend names with stretched valuations at a time when household confidence remains fragile. For global investors, the juxtaposition of steady policy rates and selective equity weakness reinforced the sense that China’s recovery will be uneven and policy‑dependent.
- Shanghai and Shenzhen benchmarks advanced as reopening flows met relatively subdued policy signals.
- Hang Seng fell as profit‑taking hit health‑care; Pop Mart (9992.HK) dropped after a product launch highlighted execution risk in crowded consumer themes.
Chips lift Seoul; Tokyo edges higher; Australia slips
South Korea’s Kospi rose 1.37%, notching another record as enthusiasm for high‑bandwidth memory and AI server supply chains kept buyers rotating into the country’s chip complex. The gains extended a run that has turned a handful of hardware and component names into regional bellwethers for global AI investment, leaving local regulators and pension funds closely tracking concentration risks.
Japan’s Nikkei 225 added 0.6% even as the broader Topix was marginally lower, a split that again highlighted how a narrow group of export‑oriented and tech‑adjacent names is carrying headline indices higher. Australia’s S&P/ASX 200 gave back early gains to close 0.41% down, as resource and financial stocks lagged despite a still‑supportive domestic rate backdrop. Investors in North Asia continued to track earnings momentum at bellwether semiconductor names and the durability of AI‑related capital spending plans, mindful that any escalation in U.S. trade frictions could disrupt complex regional supply chains.
U.S. sell‑off and AI jitters ripple across software
Overnight, U.S. stocks fell sharply: the Dow Jones Industrial Average lost 1.66%, the S&P 500 dropped 1.04%, and the Nasdaq Composite declined 1.13%. Tariff uncertainty compounded a two‑day rout in software and security shares as investors reassessed where AI‑native tools might compress margins, cannibalise existing products or re‑bundle services under larger platforms.
Cybersecurity names were hit hard after Anthropic introduced Claude Code Security, a research‑preview tool embedded in its Claude platform that scans codebases for vulnerabilities and proposes fixes. CrowdStrike, Zscaler, Datadog, Fortinet and Okta slumped amid worries that automated code‑scanning and remediation could erode parts of traditional workflows—even as several analysts argued the reaction was overdone given enterprises’ multi‑layered defense needs and regulatory obligations to maintain robust cyber controls. For boards and CISOs, the episode underlined how rapidly AI innovation can redraw perceived competitive moats across the software stack.
Anthropic is due to brief enterprises on new products on Tuesday in New York, highlighting how fast‑moving AI rollouts can shift sentiment across adjacent software categories and sharpen strategic questions for regulators over model risk, data governance and critical‑infrastructure resilience.
What Section 122 legally allows
- Statutory ceiling: A temporary surcharge “not to exceed 15 percent ad valorem” for “a period not exceeding 150 days,” unless extended by Congress. The measure applies on top of existing duties and is designed as an emergency stop‑gap rather than a standing tariff regime.
- Trigger: “Fundamental international payments problems,” including large and serious U.S. balance‑of‑payments deficits or an imminent, significant dollar depreciation. The administration will need to articulate this balance‑of‑payments case to withstand likely court and World Trade Organization scrutiny.
- Scope and form: Broad and uniform across products, with room for limited, economy‑wide exceptions (for example, critical inputs such as medical supplies or key industrial components) and the option to combine with quotas where permitted by international rules.
Policy analysts caution that Section 122 differs from other trade tools the administration has leaned on—such as Section 232 (national security) or Section 301 (unfair practices)—because it has a firm rate cap and sunset baked into statute. That narrow design could constrain the policy’s reach and duration absent congressional action, shifting part of the tariff debate back to Capitol Hill and forcing trading partners to game out both the legal risks and the political appetite for an extension.
As of Tuesday, February 24, 2026, China’s one‑year and over‑five‑year LPRs remain at 3.0% and 3.5%, and the administration’s Section 122 surcharge is scheduled to take effect for 150 days pending any congressional extension, setting up a compressed window in which markets, lawmakers and trading partners will test how much leverage a time‑limited, legally circumscribed tariff tool can actually deliver.