Stock markets around the world are deep in the red on news that U.S. President Donald Trump is moving forward with planned tariffs on Canada, Mexico and China, sparking a trade war.
In the U.S., stock market futures are down sharply in premarket trading, with the blue-chip Dow Jones Industrial Average falling as much as 600 points or 1.35%.
The benchmark S&P 500 index is down nearly 100 points or about 1.50% and the technology-laden Nasdaq index is down 365 points or 1.70%.
Elsewhere, markets are also plunging. The pan-European STOXX 600 index is down 1.3% and set for its biggest one-day slide this year.
Britain’s FTSE 100 index has dropped 1.5%, while the British pound currency is down 0.7%.
In Asia, Japan’s Nikkei stock exchange ended the trading day down almost 3%, while stocks in Hong Kong, which includes listings of Chinese companies, finished flat after reopening from Lunar New Year holidays.
Mainland Chinese markets don’t resume trading until Feb. 5 following the Lunar New Year celebrations.
The global selloff in equities comes as traders, analysts, and retail investors grapple with the implications of a global trade war, with Trump also threatening to impose tariffs on Europe and the United Kingdom.
Tariffs of 25% imposed on all imports into America from Canada and Mexico have raised concerns that it will spark a resumption of inflation that could lead to higher interest rates.
There are also concerns about the implications of a tit-for-tat trade war on key economic sectors such as the automotive and agriculture industries.
Trump has acknowledged that there will likely be some “short-term pain” for American consumers because of the trade tariffs but has said he is adamant about imposing them.
Canada, Mexico and China have each announced plans to impose countermeasures on U.S. goods entering their countries, leading to what economists’ fear could be an all out trade war.
