Stock markets tumbled on Monday as Donald Trump’s tariffs on goods from Canada, Mexico and China sparked fears of a global trade war.
It’s the first trading day since the US president made good on his promise to slap high taxes on imports to the US and announced higher-than-expected 25% tariffs on Mexican and Canadian goods.
In Asian markets, Japan’s Nikkei stock market index fell nearly 3% on Monday, and Korea’s Kospi was also down more than 2.5%. Both countries are export-heavy nations with car manufacturing which is vulnerable to further US import tax hikes.
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Australia’s benchmark, the ASX200 – often a proxy trade for Chinese markets – fell 1.8%. Stocks in Hong Kong, which include listings of Chinese companies, fell 1.1%.
The Trump tariff stock market plummet continued as markets opened across Europe.
While the new trade measures take effect tomorrow, the impact can be seen today.
10:47 Trump tariffs: ‘You could be next’UK stocks are down a significant amount. The benchmark FTSE 100 index containing the most valuable companies on the London Stock Exchange dropped more than 1.3% on the open.
It was worse for the large FTSE 250 index of companies based in the UK, it has shed 1.9%.
Sterling has taken a hit as the dollar strengthened. One pound buys $1.2316, a near two-week low but still above the lows recorded in mid-January. The pound is still faring well against the euro – in fact, it’s at a high not seen since the early days of the year, €1.2015.
‘The trade war has started’
“Trump’s trade war has started,” said Alvin Tan, head of Asia currency strategy at RBC Capital Markets in Singapore.
The US president has also threatened to impose steeper tariffs elsewhere, telling reporters import taxes will “definitely happen” with the European Union.
He said the UK “is out of line” on trade with the US and told reporters “we’ll see what happens”. But he said he was confident the situation “can be worked out” without tariffs.
Mr Trump is set to speak to the leaders of Canada and Mexico later but warned them against retaliating to his tariffs, saying: “We can play the game all they want.”
Read more: How Trump’s tariffs could impact consumers
Over the weekend. he announced he is imposing 25% tariffs on imports from Canada and Mexico, and hit China with a 10% levy. Both Canada and Mexico hit back with retaliatory tariffs.
However, the US president returned to Washington from Mar-a-Lago on Sunday night and brushed aside the reprisals.
“I love the people of Canada. I disagree with the leadership of Canada. And something’s gonna happen there,” he said.
“If they want to play the game, I don’t mind. We can play the game all they want.”
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Mr Trump said Americans could feel “some pain” from the developing trade war – and claimed Canada would “cease to exist” without its trade surplus with the US.
In a post on his Truth Social platform: “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
0:37 PM: ‘I want strong trade with US’The Trump administration has said the tariffs are aimed at stopping the spread and manufacturing of the opioid fentanyl, as well as pressuring America’s neighbours to limit illegal immigration to the US.
But it risks a trade war and higher prices for American consumers.
Read more:Trump says Canada should be ‘cherished 51st state’Why has Trump targeted Mexico and Canada?How Donald Trump’s tariffs could impact consumers
Meanwhile, Canada’s high commissioner to the UK Ralph Goodale, speaking to Sky News’ Kamali Melbourne, had a warning for allies.
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He said: “I would just say to our allies around the world watch this closely, you could be next, and in the meantime, stand by your friends.”
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Tap here to followHe added Mr Trump’s words were a “salesman’s pitch” and despite the historically close relationship between the countries “we don’t want to be each other”.