Stock markets around the world fell following the introduction of tariffs by President Donald Trump on goods entering the US from China, Canada and Mexico.
Trump has imposed 25% tariffs on imports from Canada and Mexico, and 20% tariffs against China.
Canada and China announced their own import taxes on US goods, while Mexico said it had “contingency plans”, sparking fears of full-blown trade war.
The three major stock market indexes in the US sank following the news, while the FTSE 100 index of the UK’s biggest publicly-listed companies opened lower on Tuesday and stock markets in Asia were also down.
Analysts have warned tariffs could push up prices for US households and could also have a knock-on effect on consumers across the world, including in the UK.
The chief executive of US retailer Target warned shoppers were likely to see price increases over the next couple of days.
Brian Cornell told CNBC prices for foods including strawberries, avocados and bananas could rise.
Trump threatened to impose the tariffs, which are a tax added to a product when it enters a country – on Canada, Mexico and China in response to what claims is the unacceptable flow of illegal drugs and illegal immigrants into the US.
But Canadian Prime Minister Justin Trudeau said his country was responsible for less than 1% of fentanyl entering the US and would retaliate with 25% tariffs on $150bn worth of US goods.
