EMERGING MARKETS-Asian assets take a hit as US tariffs rattle emerging markets

By Johann M Cherian

April 3 (Reuters) - Stocks and currencies across most emerging markets took a hit on Thursday, as investors came to terms with the likelihood that reciprocal U.S. tariffs could escalate a trade war and potentially tip the global economy into a recession.

MSCI's index tracking stocks in developing economies .MSCIEF dropped 0.7%, while an index tracking currencies .MIEM00000CUS weakened 0.1% against the dollar. Both the indexes were trading just shy of three-week lows.

Asian assets faced the brunt of Donald Trump's latest trade salvo, as the U.S. president slapped a baseline of 10% tariffs on imports from all countries along with separate tariffs on individual economies.

"Firstly what was surprising was the breadth of countries that they covered, the second is that the level of tariffs is much higher than expected," said Shaniel Ramjee, co-head of multi asset at Pictet Asset Management.

Stocks in Vietnam .VNI slid 6.7% to a three-month low, while the dong VND= touched an all-time low, as its exports to the U.S. now face 46% levies.

Thai stocks .SETI lost 1% and the baht THB= weakened to its lowest level since mid-January as Trump slapped a 26% tariff on its goods.

Asian economies have come onto the U.S. president's radar given that they are heavy exporters to the United States, with international manufacturers having shifted production to their economies to avoid levies imposed on China during Trump's first term.

Focus will be on any upcoming trade discussions between Washington and Southeast Asian nations.

The world's No. 2 economy China, which was already in a trade war with the United States, now faces 54% tariffs on exports to the U.S. against which Beijing vowed countermeasures.

The yuan CNH= hit a two-month low and the local benchmark .CSI300 dropped 0.6%, while Hong Kong's Hang Seng stock index .HSI fell 1.5%.

Brokerage Goldman Sachs now expects U.S. tariffs to further drag down China's economic growth by about one percentage point.

There are concerns the tariffs could fan inflation, send U.S. investors flocking to safe havens such as gold XAU=, spark retaliatory measures from countries and ultimately slow the global economy.

India's main stock indexes .NSEI, .BSESN slipped about 0.3% each, and the rupee INR= dipped 0.1%, but the assets were trading off session lows.

Investors were relieved that the South Asian economy now faced lower duties relative to its peers.

Gold producer South Africa's rand ZAR= strengthened 0.6%, having depreciated about 2% in the previous session, while stocks .JALSH slid over 2%. South Africa exports vehicles and auto parts to the United States and is now facing a 30% tariff rate.

South Africa had enjoyed a preferential trade status with the U.S. and its presidency underscored the need to negotiate a new bilateral trade deal with Washington.

An index tracking Central and Eastern European stocks .MIME00000PUS dropped 0.4%, with bourses of more open economies in Hungary .BUX and the Czech Republic .PX down over 1% each.

Hungary's forint EURHUF= depreciated 0.4% and the Czech crown EURCZK= weakened 0.2% against the euro, while Poland's zloty EURPLN= slipped 0.1%.

In a bright spot, Turkish stocks .XU100 added 0.9%, while the lira TRYTOM=D4 firmed 0.1%. The country has a smaller trade surplus with the United States relative to many of Washington's other trading partners.

Sri Lanka's sovereign dollar bonds XS2966242336=TE slid more than 2 cents on the dollar, as the island nation's exports to the U.S. faced a 44% reciprocal tariff.

In Latin America, Trump's new trade policies were a relief for Mexico, as exemptions as part of a continent-wide trade deal were retained.

The peso MXN= firmed 0.8% as President Claudia Sheinbaum said Mexico will not respond with tit-for-tat tariffs against the United States.

Brazil's real BRL= was flat. Lawmakers approved a bill outlining the framework for trade retaliation.

(Reporting by Johann M Cherian in Bengaluru; Editing by Joe Bavier)

((johann.mcherian@thomsonreuters.com;))