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Asian and European stock markets dropped on Monday as the global fallout from President Trump’s decision to impose tariffs on Mexico, Canada and China began. In the United States, shares were poised to open lower.
Japan’s Nikkei 225 index and South Korea’s Kospi each fell more than 2.5 percent. The Taiwan Stock Exchange weighted index slumped 3.5 percent. Markets in mainland China were closed on Monday for the Lunar New Year holiday. Stocks in Hong Kong, where many Chinese companies trade, dipped slightly.
Europe’s stock indexes also tumbled. The Euro Stoxx 50, made up of the region’s largest companies, dropped 2 percent and the FTSE 100 in Britain declined 1.3 percent. In the United States, S&P 500 futures slid 1.5 percent.
As investors begin to assess the potential impact from what could be the start of a disruptive global trade war, big exporting countries in Asia and Europe are likely to be particularly affected. Companies are exposed to the tariffs because they have made sizable investments in North America under agreements meant to ease trade.
For traders, the tariffs come as a “severe shock,” Jim Reid, a strategist at Deutsche Bank, wrote in a note. “The market has refused to take that threat seriously though, completely underpricing the risks.”
