Traders dumped stocks on Wall Street last night as the world lurched closer to a full-blown trade war.
The Dow Jones Industrial Average fell by 1.9 per cent, or 459 points, after the Chinese slapped tariffs on £2.1 billion of US exports, including politically sensitive food products.
It is feared this could be just the start of a damaging tit-for-tat battle between the two superpowers.
On the slide: It is feared this could be just the start of a damaging tit-for-tat battle between the US and China
It takes the Dow into correction territory as it is now more than 10 per cent below its previous peak earlier this year. The index closed at 23,644.19.
And the City will be braced for further turmoil this morning when London reopens after the Easter break.
Nick Raich of trading research firm The Earnings Scout said: ‘The new bearish narrative is that tariffs implemented by the Trump administration will spur a global trade war that would spiral the world into a recession.’ Amazon led the markets lower as US President Donald Trump renewed his attacks on the online retailer. More than £24bn was wiped off its value after Trump accused it of driving bricks and mortar shops out of business.
Another major faller was electric car company Tesla, which fell 5.1pc as fears grew for its future. Investors’ worries were made worse by a misguided April Fool’s tweet from founder Elon Musk, who joked it had filled for bankruptcy.
Trump fired the opening shots in his duel with Beijing last month, with tariffs on steel and aluminium followed by another wave hitting £43 billion of Chinese imports from robots to rail equipment. Analysts warned that the Communist country was bound to hit back – with an assault on America’s agricultural industries seen as particularly likely.
Beijing has unveiled extra charges of up to 25 per cent on US imports including scrap aluminium, pork, wine, dried food such as cherries and nuts such as pistachios and almonds.
The list does not include the £10 billion of US soybean exports. These are considered particularly important and targeting them would be seen as a major escalation.
Trump also continued his verbal assault on Amazon, hitting back at claims that the packages it sends help keep the US postal service alive.
Trump wrote: ‘Only fools, or worse, are saying that our money-losing post office makes money with Amazon. They lose a fortune and this will be changed. Also, our fully tax-paying retailers are closing stores all over the country… not a level playing field!’
Amazon shares fell 5.2 per cent.