Global markets have tumbled after the US escalated its trade dispute with China, threatening tariffs on $200 billion ($A279) of its exports, raising the prospect of further share price falls and more down days for stocks across the globe.
The S&P/ASX 200 index fell 0.7 per cent or 42.5 points lower to 6215.6 at the close of trade.
The UK’s FTSE All-Share index shed 1.2 per cent or 53 points to 4175. The Stoxx Europe 600 index fell 1.2 per cent to 381.81, heading for its biggest one-day percentage loss since June 25.
The Shanghai Composite fell 1.8 per cent, Hong Kong’s Hang Sang lost 1.3 per cent while Japan’s Nikkei fell 1.2 per cent.
The prospect of a trade war between the world’s two largest economies has drawn closer with the United States listing the Chinese export goods that could be hit with tariffs of 10 percent as soon as September.
The US move on tariffs coincides with US President Donald Trump due to attend a tense meeting with Nato allies
The list of goods to face 10 percent punitive duties includes frozen meats, butter, onions, garlic and various vegetables, fruits, nuts, metals, a long list of live and an extensive list of chemicals.
The new tariffs come with Donald Trump hitting back after China retaliated for the first round of 25 percent tariffs on $34 billion worth of imports that Washington imposed last week.
China’s commerce ministry reportedly “’shocked” and said it would complain to the World Trade Organisation.
Beijing has said it would retaliate with a “combination of quantitative and qualitative measures.” This includes threats that US businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.
The US Trade Representative office is planning to hold hearings on the targeted products.
It says it would take about two months to finalize the list, at which point Trump would decide whether to go ahead with the tariffs.
Peter Tchir, head of macro strategy at Academy Securities, said investors should brace themselves for the impact of the tariffs.
“Markets have been treating trade wars as though they are a trade tiff,” Mr Tchir told the Financial Times. “But I think this is bigger. Trump is very committed to it and I think markets are underestimating that. Investors are being too complacent. I think volatility is now going to increase. We are going to have to start picking the winners and losers from trade wars.”