Donald Trump’s threats of tariffs sent markets plummeting last night amid fears of a global trade war. The US President told reporters onboard Air Force One last night that levies would essentially be imposed on all countries, stoking fears about the economic impact.

It is expected that tariff recommendations will be presented to Trump on Tuesday, which will be enforced on Wednesday, a day that the president has labelled ‘liberation day’. They are likely to include a 25% tariff on all cars entering the US as well as further charges on countries deemed to be giving the US a “bad deal”. In response, the Nikkei stock index lost 4% before finishing 3.86% down. Meanwhile, Korea’s Kospi index dropped 2.83%.

Likewise, The UK’s FTSE 100, which includes the most valuable companies on the London Stock Exchange, fell to a more than two-week low.

The European Union has threatened to respond in kind, with German Chancellor Olaf Scholz confirming that they were preparing a list of concessions to offer to Trump to stave off threat.

Ajay Rajadhyaksha, head of rates markets at Barclays, said: “For the first time in years, we find ourselves genuinely worried about risk assets.

“If policy chaos and trade wars worsen much further, a recession is now a realistic risk across major economies.”

Last week, Chancellor Rachel Reeves said that the government was working tirelessly to come to an arrangement with Washington that would ease threats of tariffs on UK goods.

Trade expert David Henig told LBC that a trade war between the UK and US.

He said: “What happens is we say that it is 20% on bourbon coming from Kentucky, and they say it is 20% coming on whiskey from Scotland.

“We drink less Kentucky bourbon, they drink less scotch and everybody loses.

“You multiply that up by other products, they don’t buy our Jaguars, we don’t buy their Harley Davidsons. Everybody loses, nobody is gaining.”

Economic uncertainty has raised fears that the United States could be headed for recession, with analysts at Goldman Sachs projecting that there is a 35% chance, up from 20%.

This comes following an election campaign in which Trump promised to”fix” the American economy following a cost of living crisis that has affected countries across the globe.