Stock markets fall after US tariffs spark trade war fears

Stock markets around the world dropped sharply after President Donald Trump imposed new tariffs on imports from China, Canada, and Mexico.

The tariffs include a 25% levy on goods from Canada and Mexico and a 20% tariff on Chinese imports. In response, Canada and China announced their own retaliatory import taxes on U.S. products, while Mexico stated it had "contingency plans" in place, fueling fears of an escalating trade war.

Following the news, all three major U.S. stock market indexes fell, while the FTSE 100—the index of the UK’s largest publicly listed companies—opened significantly lower on Tuesday. Asian stock markets also declined.

Analysts warn that the tariffs could increase costs for U.S. consumers and have ripple effects on global markets, including the UK.

Trump justified the tariffs as a response to what he claims is an unacceptable flow of illegal drugs and immigration into the U.S. However, Canadian Prime Minister Justin Trudeau pushed back, stating that Canada accounts for less than 1% of fentanyl entering the U.S. In response, Canada will impose 25% tariffs on $150 billion worth of American goods.

China also announced countermeasures, including 10-15% tariffs on U.S. agricultural products such as wheat, corn, beef, and soybeans. Mexico is expected to reveal its response soon.