LONDON/TOKYO (Feb 3): European shares slid on Monday, joining a worldwide selloff driven by concern that US President Donald Trump's tariffs on Canada, Mexico and China are just the opening salvo in a global trade war that would curb economic growth internationally.

The pan-European STOXX 600 index was down 1.3% at 0845 GMT, set for its biggest one-day slide this year.

Futures for Wall Street's S&P 500 and tech-heavy Nasdaq fell 1.6%. Futures on the Russell 2000 index of small cap stocks — viewed as major beneficiaries of Trump's policies — fell 2.23%.

Europe's biggest automakers, which are vulnerable to trade duties, sank by more than 3% while the region's technology shares were also among the major losers, falling over 2%. The euro currency dropped 0.9%.

In three executive orders, the US imposed 25% tariffs on Mexican and most Canadian imports and a further 10% on goods from China, starting on Tuesday.

Britain's FTSE 100 fell 1.4%, while the pound dropped 0.4% after Trump told reporters on Sunday that while the country was "out of line" when it came to trade, it may be able to avoid tariffs.

"We'll see how things work out. It might happen with them, but it will definitely happen with the European Union, I can tell you that," said Trump.

The president warned that Americans might feel "some pain" as tariffs are expected to increase consumer prices in the US, while the effect of the trade war is expected to be felt far beyond North America.

The Mexican peso tumbled more than 2% to touch its lowest in nearly three years against the dollar. Mexican President Claudia Sheinbaum ordered retaliatory tariffs, as did Canada, with Prime Minister Justin Trudeau warning Americans that tariffs would have real consequences for them.

The tit-for-tat moves led to investors buying US dollars, selling stocks and fretting about inflation.

Japan's Nikkei share average ended the day down almost 3% and Australia's benchmark — often a proxy trade for Chinese markets — dropped 1.8%.

Stocks in Hong Kong, which include listings of Chinese companies, finished flat upon reopening from Lunar New Year holidays. Mainland Chinese markets resume trading on Wednesday.

'A little bit of shock'

Trump's move was the first strike in what could usher in a destructive global trade war and drive a surge in US inflation that would "come even faster and be larger than we initially expected," said Paul Ashworth of Capital Economics.

A model gauging the economic impact of Trump's tariff plan from EY chief economist Greg Daco suggests it would reduce US economic growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in "stagflation" at home.

"People thought, okay, there's a pro-business president, there's a pro-business Congress. What could go wrong, right? And I think it's just a little bit of a shock that he's trying to do so many things at once," said Olivier D’Assier, head of applied research for Asia Pacific at investment consultant Simcorp.

"He's picking so many fights, and the fights that he's picking first don't seem to be the most pressing ones."

Barclays strategists previously estimated tariffs could create a 2.8% drag on S&P 500 company earnings, including the projected fallout from retaliatory measures.

US two-year treasury yields rose as much as 3.6 basis points to 4.28%, a 10-day high, on concerns tariffs will stoke inflation and delay Federal Reserve interest rate cuts.

Bitcoin tumbled as low as US$91,439.89, a three-week trough, while ether, the second-largest cryptocurrency by market value, fell 20% over the weekend and into Monday.

Oil prices rose, with US Texas Intermediate crude up 2.62% at US$74.42 a barrel and Brent crude futures up 1.7% at US$76.94 a barrel as investors tried to gauge the impact of the tariffs on world energy.

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