- Trump said he is willing to escalate the current tariffs on China from $34 billion to $500 billion.
- Markets around the world dropped after the comments.
- Traders are afraid we're heading for a full-blown global trade war.
- You can follow global market developments at Markets Insider.
LONDON — Global markets are falling late on Friday morning after US President Donald Trump threatened to levy new tariffs on more than $500 billion of goods from China.
Trump told CNBC in an interview that ran on Friday that he is "ready to go to 500" on tariffs on Chinese imports.
S&P 500 futures fell by 0.3% in response to the comments and Dow Jones Industrial Average futures fell 0.4% shortly after the news.
In Europe, the FTSE 100 dropped half a per cent in minutes after the comments and Germany's DAX suffered a similar fall.Markets Insider
Neil Wilson, the chief market analyst at Markets.com, said in an email: "First the dollar, now equities: Trump’s interview with CNBC is skewering bulls all over the place."
"Equities sank sharply in the wake of Trump saying is he ready to slap tariffs on all the goods the US imports from China, which total over $500bn. That is versus the current tariffs on $34bn of imports and therefore points to serious escalation."
"It’s proof, if it were needed, that the president is prepared to go all the way in the trade war to exact concessions from China, which simply cannot match the US firepower. In light of the EU and others saying they are ready to respond to tariffs on cars, the stakes are rising fast."
Trump has been threatening to levy tariffs on European car manufacturers in a bid to force more production into the US. European auto shares fell on Friday in response to Trump's China comments. Volkswagen shares are down 2% at 12.35 a.m. BST (7.35 a.m. ET) and BMW is down 1.5% at the same time.
Wilson said: "Whether we get to the point where there is a full-blown trade war remains debatable, but the odds are shortening by the day."