Shanghai/Tokyo — Asian stocks wobbled on Friday, as Washington slapped tariffs on Chinese imports, a move many investors fear could be the start of a full-scale trade war between the world’s two largest economies.

The US tariffs on more than 800 goods from China worth $34bn took effect just after midnight in Washington, or 4.01am GMT.

President Donald Trump has warned that the US may ultimately target more than $500bn worth of Chinese goods, an amount that roughly matches its total imports from China last year.

China’s commerce ministry said shortly after the US tariffs took effect that it was forced to retaliate, meaning $34bn worth of imported US goods, including cars and agricultural products, are also subject to 25% tariffs.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.1% lower, pulling back from a modest early rise. The index has lost near 9% since June 7.

The Shanghai composite index ended morning trade down 0.3%, before the tariffs took effect, and trading was to resume at 5am GMT. Earlier on Friday, the index fell as much as 1.6% to 2,691, getting close to its January 2016 low of 2,638.

"China will surely take retaliatory steps, to which US President Donald Trump has threatened more tariffs," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

A trade war "now has become a reality", he said.

"If this was a boxing match, the first round has just begun. It is going to be a long process. Trump is unlikely to back down easily ahead of the US midterm elections (in November), especially given the recent rise in his popularity," Fujito said.

Seoul’s Kospi index was down 0.25% and shares in Taiwan were 0.4% lower. Shares of Singapore, a major trading hub for the region, dropped more than 2% to 14-month lows.

Japan’s Nikkei stock index rose 1.1% from Thursday’s three-month low, helped in part by a boost in car makers’ shares on signs that Washington and the European Union may be seeking a compromise on tariffs on cars.

"How that’s going to iron out, I think that’s still going to be a major point of contention. But at least they’re talking and I think while cooler heads prevail, that’s the positivity that’s emanated from the markets," said Stephen Innes, head of Asia-Pacific trading at Oanda.

Japanese car makers’ shares rose 1.4%, with Toyota Motor up 1.6% and Honda Motor up 1.5%. South Korea’s Hyundai Motor jumped 2.9%.

In Europe, car makers’ shares jumped 3.4% on Thursday.

But many market players remained cautious, given the risk of further escalation in the trade war between China and the US.

Copper, seen as barometer of the world’s economic strength because of its wide industrial use, extended its losses to $6,236 a tonne, down 1.7% on the day. It has fallen 15% from its peak hit just a month ago.

In the currency market, the yuan eased slightly in choppy trade, though it kept some distance from its 11-month lows touched earlier this week.

The renminbi traded at 6.6534 to the dollar, down 0.25% on the day, compared with Tuesday’s low of 6.7204.

Newly released minutes from the US Federal Reserve’s last policy meeting on June 12-13 showed policy makers discussed whether recession lurked around the corner, and expressed concerns global trade tensions could hit an economy that by most measures looked strong.

The yield on benchmark 10-year Treasury notes was at 2.8364%, compared with a US close of 2.84%.

The two-year yield, which rises with traders’ expectations of higher Fed fund rates, was at 2.553% compared with a US close of 2.561%. The dollar was little changed against the yen at ¥110.67.

The euro was down a hair on the day at $1.1685, while the dollar index, which tracks the greenback against a basket of six major rivals, was flat at 94.474.

After ticking slightly higher, oil prices fell after US government data showed an unexpected jump in crude oil stockpiles.

The market remains nervous about tariffs amid an increasingly tight oil market.

Tension between the US and Iran continued to rise as the US Navy said it stood ready to ensure free navigation and the flow of commerce, after Iran’s Revolutionary Guards threatened to block oil shipments through the Strait of Hormuz.

US crude fell 0.1% at $72.85 a barrel. Brent crude was 0.25% lower at $77.20 a barrel.