Shares of Japanese machinery makers with heavy exposure to China plummeted recently as China and the United States moved closer to a trade war that could damage global growth, according to a Reuters article in The Asahi Shimbun.

Shares in machinery manufacturers, which account for 20 per cent of Japan’s total exports, had enjoyed strong gains in the past year on the back of brisk demand for investment in electronics and semiconductors in China, Japan’s biggest trading partner.

US President Donald Trump signed a presidential memorandum that will target up to $60 billion (6 trillion yen) in Chinese goods with tariffs to kick in after a 30-day consultation period. The tariffs would target sectors including technology.

“Responding to rising demand for tech products in China, Japan’s capital goods makers and machinery makers had seen strong exports so they are likely to hit hard from now,” said Shogo Maekawa, global market strategist at JPMorgan Asset Management.

The Tokyo machinery sector index slumped 5.6 per cent, helping to pull the Nikkei share average down 4.5 per cent.

Machine tool makers were hammered, with Makino Milling Machine sliding 6.1 per cent, Okuma Corp. nose-diving 7.4 per cent and DMG Mori Co. stumbling 6.0 per cent.

Since the beginning of the year, Makino has fallen 15 per cent, while Okuma and DMG Mori have both sunk around 20 per cent.

The Cabinet Office said that it expects a 3.1 per cent drop in Japan’s exports, the first decline in five quarters.

“For the Japanese economy which relies heavily on external demand amid weak domestic demand, this signals an end to strong exports,” said Toru Suehiro, a senior market economist at Mizuho Securities.

Big losers included semiconductor equipment makers Advantest and Tokyo Electron Ltd. dropped 4.1 per cent and 5.7 per cent, respectively. High-purity silicon maker Sumco Corp. also shed 5.0 per cent and silicon products maker Shin-Etsu Chemical Co. tumbled 6.7 per cent. Construction equipment maker Komatsu tumbled 6.3 per cent.