Donald Trump’s threats of additional trade tariffs against China, on top of the 10% hike imposed earlier this month, have contributed to a widespread stock market sell-off.
Sentiment was already sour on the tariff front, given the spectre of 25% import duties being slapped on the EU, before the US president confirmed his intention to target Canada, Mexico and China next week.
Mr Trump said his proposed 25% tariffs on Mexican and Canadian goods – delayed by a month – would take effect on Tuesday 4 March as planned, alongside an extra 10% duty on Chinese imports.
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Beijing’s reaction was to threaten further retaliation, building on the narrative that the Trump administration was instigating a global trade war.
Asia felt the most pain in equities, with the Hang Seng in Hong Kong falling more than 3%, while Japan’s Nikkei slumped to a five-month low as demand soared for the safe haven yen.
In Europe, the DAX in Germany and French CAC were on course to build on declines seen on Thursday, with the manufacturing-heavy DAX set to lose more than 1% at the open.
The UK may have been spared Trump tariff threats but the FTSE 100, which is internationally focused, was still set to feel some pain with IG data indicating a decline of 0.7% when trading started.
The main fear among investors is damage to the global economy from a widespread and protracted trade fight.
Among other assets to feel the impact was oil, with Brent crude down by almost 1% to trade at $73 a barrel.
Cryptocurrencies took the largest hammering.
Bitcoin was 27% below its record high set in January at $79,740 and was down by 6% on the day.
Mr Trump told reporters in the Oval Office he decided to add the extra tariffs on China and stick to the Tuesday deadline for Canada and Mexico given what his administration sees as insufficient progress on curbing fentanyl flows into the country.
“There are ongoing discussions with the Chinese, Mexico and Canada,” a White House official told the Reuters news agency.
“We’ve gotten a good handle on the migration issue, but there are still concerns on the other issue of fentanyl deaths.”
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