Donald Trump’s trade war escalation has sparked a global sell-off, with US markets seeing the biggest declines.
Tech and retail shares were among those worst hit when Wall Street opened for business, following on from a flight from risk across both Asia and Europe earlier in the day.
The tech-focused Nasdaq was down more than 5.5%, the S&P 500 by 4.3% and the Dow Jones Industrial Average by just under 4% in early dealing.
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Analysts said the focus in the US was largely on the impact that the expanded tariff regime will have on the domestic economy but also effects on global sales given widespread anger abroad among the more than 180 nations and territories hit by reciprocal tariffs on Mr Trump‘s self-styled “liberation day”.
They are set to take effect next week, with tariffs on all car, steel and aluminium imports already in effect.
Price rises are a certainty in the world’s largest economy as the president’s additional tariffs kick in, with those charges expected to be passed on down supply chains to the end user.
The White House believes its tariffs regime will force employers to build factories and hire workers in the US to escape the charges.
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The latest numbers on tariffs
Economists warn the additional costs will add upward pressure to US inflation and potentially choke demand and hiring, ricking a slide towards recession.
Apple was among the biggest losers in cash terms in Thursday’s trading as its shares fell by almost 9%, leaving it on track for its worst daily performance since the start of the COVID pandemic.
Other losers included Tesla, down by almost 6% and Nvidia down by more than 6%.
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Many retail stocks including those for Target and Footlocker lost more than 10% of their respective market values.
The European Union is expected to retaliate in a bid to put pressure on the US to back down.
The prospect of a tit-for-tat trade war saw the CAC 40 in France and German DAX fall by more than 3% and 2.5% respectively.
The FTSE 100, which is internationally focused, was 1.7% lower and trading at a three-month low.
Among the stocks seeing big declines were those for big energy as oil Brent crude costs fell back by 6% to $70 due to expectations a trade war will hurt demand.
The more domestically relevant FTSE 250 was 1.8% in the red.
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A weakening dollar saw the pound briefly hit a six-month high against the US currency at $1.32.
There was a rush for safe haven gold earlier in the day as a new record high was struck though it was later trading down.
Sean Sun, portfolio manager at Thornburg Investment Management, said of the state of play: “Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade.”
He warned there was a big risk of escalation ahead through countermeasures against the US.
