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Geneva, Mar 3 (Canadian-Media): As a result of United States (US) President Donald Trump 's "trade war" talk, a global sell-off in stocks came back around to the US in morning trading Friday, media reports said.
A "trade war is in no one's interests," said Roberto Azevedo, head of the World Trade Organization.
Roberto Azevedo/Facebook Page
Trump took to Twitter to defend his promise from Thursday to impose stiff tariffs on imports of steel and aluminum, which worried investors about increasing retaliation by other countries that would damage the global economy.
Trump stated that the US is losing on trade reportedly with virtually every country and that "trade wars are good" and "easy to win."
But Investors felt differently as markets tumbled in Asia, where China expressed "grave concern," and spread to Europe too.
The president of the European Union's governing body reportedly promised retaliation if Trump follows through.
When markets opened in the U.S. on Thursday, the Dow Jones industrials and S&P 500 followed steep declines.
A trade war would threaten the optimism of investors that the strengthening global economy would lead to higher corporate profits.
Big U.S. companies, heavily dependent on global trade, reportedly were optimistic of investors in U.S. stocks which had only recently begun feeling the full benefit.
According to official reports, inflation has been low in the years following the Great Recession, could lead to higher inflation If Trump follows through on his tariff promise.
Federal Reserve -- the central banking system of the United States created in 1913, with the enactment of the Federal Reserve Act -- would reportedly be forced to raise short-term rates more quickly and severely than expected by investors.
That could easily upset markets, which had been enjoying a remarkably smooth ride last year.
In the wake of declines in energy, financial and industrial shares and oil prices combined with global investors' concern about a trade war by Trump, Canada's main stock index reportedly fell to a two-week low on Friday..
Trump unveiled the tariffs on Thursday but was not clear if these would apply to Canada, which is the largest supplier of both steel and aluminum to US.
Canada's economy could also be impacted by talks with the US and Mexico to overhaul the North American Free Trade Agreement (NAFTA) as Canada sends 75 percent of its exports to US.
(Reporting by Asha Bajaj)