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The pan-European Stoxx 600 index, Germany’s DAX, France’s CAC 40 and the FTSE 100 in London were all lower on Friday morning as global trade concerns weighed on the markets after China vowed to retaliate against US President Donald Trump’s threat to hike tariffs on products from the country to 20%.

Shares also retreated in Asia overnight on the initial announcement, with benchmarks in Japan, Hong Kong and South Korea tumbling more than 2% as US President Donald Trump also vowed to push ahead with 25% tariffs on imports from Mexico and Canada.

Tokyo’s Nikkei 225 index lost 2.9% to 37,155.50, pulled lower by plunging prices for shares in technology companies. Computer chip test equipment maker Advantest sank 8.8%, Disco Corp., another equipment maker, lost 10.3% and Tokyo Electron shed 4.5%.

Hong Kong’s Hang Seng index dropped 3.4% to 22,905.52, while the Shanghai Composite index lost 2% to 3,320.90.

Trump said Thursday that “the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled” for imports from Canada and Mexico.

China’s Commerce Ministry issued a statement on Friday protesting Trump’s decision to raise tariffs on imports from China by 10%, saying it violated international trade rules and would add to the “burden on American companies and consumers and undermine the stability of the global industrial chain.”

South Korea’s Kospi gave up 3.4% to 2,532.78. Meanwhile, in Australia, the S&P/ASX 200 shed 1.2% to 8,172.40.

“Investors remain on edge following President Donald Trump’s unexpected announcement of a 25% tariff on Canadian and Mexican imports, set to take effect on March 4. This move, along with increased duties on goods from China and the European Union, has raised fears of retaliatory measures, further disrupting global supply chains and corporate earnings,” Naeem Aslam, chief investment officer at Zaye Capital Markets, said in an email note to Euronews Business.

US markets lower at close on Thursday

In the US, on Thursday, the S&P 500 sank 1.6% to 5,861.57 and the Dow Jones Industrial Average dropped 0.4% to 43,239.50. The Nasdaq composite tumbled 2.8% to 18,544.42.

The S&P 500 has fallen five out of the past six trading sessions after setting an all-time high last week. Concerns about the US economic outlook have been behind much of the drop, including worries over how tariffs could worsen inflation and mass layoffs of government workers could increase unemployment.

All the talk on tariffs has also left US households more nervous about the economy.

Such uncertainty also pressures the Federal Reserve, which has few if any tools to help an economy where growth is slowing and inflation is rising at the same time.

For now, at least, the US economy appears to be in solid shape. The government on Thursday left alone its estimate for the US economy’s performance during the last three months of 2024, though it raised its estimate for a measure of inflation during the quarter.

A separate report said more US workers applied for unemployment benefits last week. While the number is at a three-month high, it’s still nowhere close to where it’s been in past recessions.

In other trading early Friday, US benchmark crude oil lost 61 cents to $69.74 per barrel in electronic trading on the New York Mercantile Exchange.

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Brent crude, the international standard, handed back 57 cents, to $73.00 per barrel.

The US dollar rose to 150.03 Japanese yen from 149.82 yen late Thursday. The euro slipped to $1.0390 from $1.0401. Meanwhile, the pound took another leg lower on the dollar yesterday, but continues to rally on the euro.

“The UK’s lack of dependence on global demand and lower exposure to Trump’s protectionism means that Britain is relatively isolated from the possibility of a trade war, and sterling subsequently appears well placed to outperform its European counterparts,” Matthew Ryan, head of market strategy at global financial services firm Ebury, said in a note sent to Euronews Business.