Dow futures are poiting towards a drop of more than 250 points at the open today as global markets respond to the shock of President Donald Trump's new tariffs on aluminum and steel.
President Trump tweeted confirmation of his plans today, saying: "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win."
Yesterday President Donald Trump said the US would be imposing new tariffs on aluminum and steel.
The shocking protectionist strategy is expected to be confirmed as early as next week, and the tariffs of 25 percent on steel and 10 percent on aluminum, are expected to put intense pressure on both domestic and international companies.
European Commission President Jean-Claude Juncker, said that President Trump's strategy, "can only aggravate matters."
The FTSE 100 has fallen 1 percent this afternoon at just under 7,100 points, dragged down by falls in some heavyweight mining stocks such as Anglo American and Rio Tinto.
The Guardian report that an member of the European Parliament demanded that Europe must retaliate if the US imposes tariffs on steel and aluminium.
On the need for Europe to throw its forces into any trade war, Manfred Weber, chairman of the EPP Group of centre-right MEPs, said: “The US President is playing a very dangerous game.
"A trade dispute is to the detriment of everyone. But if Donald Trump increases tariffs on European goods for no reason, then Europe must react.
"Priority must be given to protecting jobs in Europe. The EU has to show its strength.”
Neil Clothier at Huthwaite International told Express.co.uk that with all trade wars – effective negotiation is the only solution to turbulent deal making.
Mr Clothier said that with the US threatening fresh trade tariffs, the globe sits and waits for what could be the start of a new trade war amongst super powers worldwide.
Begging the question why?
He said: "Is this move targeted at China, is it an unprovoked attack on the EU? Is it really less about steel and more about Trump trying to exert America’s influence at a time when Russia and China are in a race to become the number one super power?
"It could be any of the above, and it certainly has left people feeling unnerved – but what are the real consequences here?"
Mr Clothier says that from a tactical perspective, Trump is implementing Power Play – a technique likely to elicit retaliation from those in the firing line. He adds that whilst many implement Power Play as a level or bargaining chip for future deals, it often has an adverse effect and can in fact damage future relations.
He said: "Relationships take a lifetime to build, but seconds to destroy. Once the toothpaste is out of the tube, it’s difficult to put it back."
Mr Clothier says that the message being received by many trade partners of the US by yesterday’s announcement is can the USA go it alone?
He asks: "Will this force Europe to develop better trade relationships with China and Russia? And what will this result in - a further undermining America’s global power and position?"
more to follow...