A global market sell-off intensified yesterday after Donald Trump ramped up tariffs on Canada – less than 48-hours after ex-Bank of England governor Mark Carney was named as the country’s leader.
The US president said he would double tariffs on Canadian steel and aluminium from 25 per cent to 50 per cent from today.
The move escalated fears that a trade war will weaken the global economy and push the US into recession.
And it deepened a stock market rout that began on Monday, which saw the tech-heavy Nasdaq index fall 4 per cent and saw $4 trillion wiped from the S&P 500’s peak last month.
Markets were spooked by the prospect that Trump’s policies could raise prices for businesses and dent consumer confidence.
Airlines suffered a sharp drop yesterday after American carrier Delta cut profit expectations for the first quarter in half due to weakening travel demand.
Trade war: US president Donald Trump (pictured) said he would double tariffs on Canadian steel and aluminium from 25% to 50%
In London, shares in BA-owner International Airlines Group fell more than 6.1 per cent to 291.5p and EasyJet’s stock dropped 1.9 per cent. Dublin-listed Ryanair slid 1.75 per cent.
The FTSE 100 index of blue-chip stocks fell 1.2 per cent, or 104.23 points, to 8495.99.
On Wall Street, the benchmark S&P 500 index – which suffered its biggest one-day drop of the year on Monday – closed down almost 1 per cent last night, while the Dow Jones Industrial Average fell more than 1 per cent and the tech-heavy Nasdaq dropped 0.2 per cent.
Sterling rose against the dollar, hitting a four-month high as it edged closer to $1.30 on US recession fears.
Gerard Lyons, chief economic strategist at investment service Netwealth, said: ‘When Trump was elected, it was clear that his economic policies contained the good, the bad and the uncertain. Now the focus is on the bad – namely tariffs.
The uncertainty around the execution of these adds to the uncertainty. Tariffs can have a triple whammy, adding to worries about inflation, growth and denting confidence.’
Experts at Citi became the latest to downgrade their stance on US stocks, cutting them to ‘neutral’, while Goldman Sachs cut its forecast for US economic growth.
Bosses from some of America’s biggest firms including JP Morgan, Apple and Walmart were due to meet Trump in Washington last night.
Trump increased tariffs in retaliation to Ontario’s decision to impose a 25 per cent tariff on electricity exported to the US.
He also threatened to ‘substantially increase’ levies on car imports from Canada, which he said would ‘permanently shut down’ the nation’s motor manufacturing industry.
The Bank for International Settlements, known as the ‘central bank of central banks’, said Trump’s promise to impose tariffs and cut government jobs would push up inflation and harm the world economy.
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