The whiff of a trade war has prompted falls in global stock markets.

Dated: 2nd March 2018

President Trump alarmed investors on Thursday by announcing heavy tariffs on steel and aluminum imports. He followed that up Friday with a tweet that said “trade wars are good, and easy to win.”

Investors are worried that Trump stance could set off a wave of protectionist policies across the globe that will hurt businesses and the economy.

Benchmark indexes in Frankfurt and Paris shed roughly 2% in early trade, while stocks in London dropped by 1%. The Nikkei dropped 2.5% in Tokyo, while Hong Kong stocks slid 1.5%.

Trump said his administration would impose a 25% tariff on steel imports and a 10% tariff on aluminum.

Investors are worried how major US trading partners like China, Canada and the European Union will respond.

:Edit: China has responded with equal tariffs on US products of their own, refer to other article in world news.

If more and more countries put up tariffs on goods coming into their territory, that could push up prices for consumers and depress global trade, which has helped spur recent growth in many major economies around the world.

Analysts in Asia are paying particular attention to what happens in the relationship between the world’s two largest economies, the US and China.

While steel and aluminum make up just a small part of China’s exports to the US, Trump’s move “is expected to invite the ire” of America’s largest trading partner, Jingyi Pan, a market strategist with investment advisory firm IG, said in a note to clients.


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