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 4 March as planned, alongside an extra 10% duty on Chinese imports.
Money latest: Pocket money for kids varies by area
Beijing’s reaction was to threaten further retaliation, building on the market fears the Trump administration was risking a deepening global trade war.
The mood was already sour in the US on Thursday when a tech sell-off linked to poorly received results from Nvidia knocked almost 2.7% from the Nasdaq.
Tech shares were among those hammered as the focus switched to Asia on Friday morning though trades were increasingly dominated by trade war concerns.
More from MoneyThe Hang Seng in Hong Kong fell 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 losing just shy of 1% at the open.
The UK may have been spared Trump tariff threats – and even promised renewed trade talks during Prime Minister Sir Keir Starmer’s meeting at the White House on Thursday – but the FTSE 100 was still feeling some pain.
A decline of 0.4% was registered in early trading though it later entered positive territory, aided by some strong corporate earnings including full-year results for British Airways parent firm IAG.
Read more: Trump opens door to US-UK trade dealThe effects of Trump trade tariffs explained
Get Sky News on WhatsAppFollow our channel and never miss an update.
Tap here to followThe main fear among investors is damage to the global economy from a widening and protracted trade fight as Mr Trump battles to secure American jobs through the imposition of tariffs.
But one consequence of higher import costs due to the duties is the fact they risk stoking US inflation, as costs are passed on.
Brent crude oil was 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 down by 6% on the day.
3:02 China hits back at new US tariffsMr Trump told reporters in the Oval Office he decided to add the extra tariffs on China and stick to the deadline for Canada and Mexico because of 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.”
Be the first to get Breaking News
Install the Sky News app for free
It was a narrative that was firmly rejected by China’s foreign ministry.
A spokesperson said China would take all necessary measures to firmly safeguard its legitimate interest.
“The US is once again using the fentanyl issue as a pretext to threaten China”, Lin Jian told a regular news conference.
Commenting on the downbeat market mood, Derren Nathan, head of equity research at Hargreaves Lansdown, said:“The only certainty in this saga is uncertainty, so keep a close eye on developments between now and 4 March.
“Next on the agenda is reciprocal tariffs pencilled in for 2 April with other major US trading partners. The EU, in particular, will be in focus.
“An amicable start to talks with UK premier Keir Starmer looks to have set the tone for a potential trade deal with the UK but with no details outlined it has not been enough to boost enthusiasm for London listed shares.”