Shares in European automakers were hit particularly hard, with Volkswagen shedding 3.5 per cent and Jeep maker Stellantis down more than 4.5 per cent. VW makes some cars for the US market in Mexico, while Stellantis has factories in both Canada and Mexico.
Asian stock markets finished mostly in the red.
“Investors fear that this trade war will result in a significant deterioration in the global economy,” said John Plassard, investment specialist at Swiss asset manager Mirabaud.
There was also a sharp selloff across the cryptocurrency sector, with bitcoin slumping almost five per cent before rebounding.
Saturday tariff announcement “caught markets somewhat off guard, despite Trump’s prior hints”, said Daniela Sabin Hathorn, senior market analyst at brokerage Capital.com.
“The lack of a clear economic rationale behind this decision – justified primarily as a measure to curb illegal immigration and fentanyl imports – has unsettled investors,” Sabin Hathorn said.