Markets tumble in reaction to Trump’s tariffs as he warns UK ‘out of line’ on trade with US

Shares on Asian markets tumbled in early trade on Monday as Donald Trump’s tariffs on goods from Canada, Mexico and China sparked fears of a global trade war.

Japan’s Nikkei opened down 2.9% this morning while Australia’s benchmark – often a proxy trade for Chinese markets – fell 1.8%. Stocks in Hong Kong, which include listings of Chinese companies, fell 1.1%.

“Trump’s trade war has started,” said Alvin Tan, head of Asia currency strategy at RBC Capital Markets in Singapore.

The US president has also threatened to impose steeper tariffs elsewhere, telling reporters import taxes will “definitely happen” with the European Union.

He said the UK “is out of line” on trade with the US and told reporters “we’ll see what happens”. But he said he was confident the situation “can be worked out” without tariffs.

Mr Trump is set to speak to the leaders of Canada and Mexico later but warned them against retaliating to his tariffs, saying: “We can play the game all they want.”

Over the weekend. he announced he is imposing 25% tariffs on imports from Canada and Mexico, and hit China with a 10% levy. Both Canada and Mexico hit back with retaliatory tariffs.

However, the US president returned to Washington from Mar-a-Lago on Sunday night and brushed aside the reprisals.

“I love the people of Canada. I disagree with the leadership of Canada. And something’s gonna happen there,” he said.

“If they want to play the game, I don’t mind. We can play the game all they want.”

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Mr Trump said Americans could feel “some pain” from the developing trade war – and claimed Canada would “cease to exist” without its trade surplus with the US.

In a post on his Truth Social platform: “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”

The Trump administration has said the tariffs are aimed at stopping the spread and manufacturing of the opioid fentanyl, as well as pressuring America’s neighbours to limit illegal immigration to the US.

But it risks a trade war and higher prices for American consumers.

Read more:
Trump says Canada should be ‘cherished 51st state’
Why has Trump targeted Mexico and Canada?
How Donald Trump’s tariffs could impact consumers

Meanwhile, Canada’s high commissioner to the UK Ralph Goodale, speaking to Sky News’ Kamali Melbourne, had a warning for allies.

He said: “I would just say to our allies around the world watch this closely, you could be next, and in the meantime, stand by your friends.”

He added Mr Trump’s words were a “salesman’s pitch” and despite the historically close relationship between the countries “we don’t want to be each other”.