World markets have fallen sharply amid fears that surprise steel and aluminium tariffs proposed by the US will spark a trade war.
Asian stocks fell to multi-year lows, while European shares also opened lower. Investors, spooked by the US position, piled out of stocks in steel and manufacturers.
The tariffs raise the prospect of tit-for-tat curbs on American exports and higher prices for domestic users, further clouding the outlook for economic growth at a time when central banks around the globe are embarking on policy-tightening or approaching it.
Europe promised to act firmly and China said it would defend its interests appropriately if US President Donald Trump followed through with his pledge to lump a 25pc tax on steel and 10pc on aluminium next week.
Asian countries reacted with concern to Mr Trump's comments, with Australia's trade minister warning that it could risk retaliation from other economies and cost jobs, while China predicted harm to trade if other countries follow the US.
Closer to home, the European Commission said it viewed international trade as a win-win in which everyone benefits, but warned that it will respond to defend its interests.
"We don't see this as a situation where, like in a zero-sum game, one party loses because another party wins. Trade is beneficial for everyone. It needs to take place on the basis of rules, and these rules are in place," a spokesman said.
"The measures that we are prepared to take will prove that we will, on the basis of the rules, not hesitate to protect our industry."
Mr Trump said the proposed duties would be formally announced next week, although White House officials later said some details still needed to be ironed out.
In a note to investors yesterday, Investec Ireland said the move - part of Mr Trump's America First strategy - has been widely condemned on the global stage, and has received criticism from some within the US also.
"It is expected to trigger legal challenges by China, the EU and Brazil at the WTO, while it is thought that China will retaliate with tariff announcements which will hit US agricultural exporters, with the Trump announcement appearing particularly cutting, given that it came even as a top Chinese economic official was in Washington for talks aimed at forestalling a possible trade war," Investec said.
The move is already affecting company decisions.
Sweden's Electrolux, Europe's largest home appliance maker, said it would put on hold a planned $250m investment in the US. It said tariffs could cause a pretty significant increase in the price of steel on the US market.
Mr Trump's announcement drove a third straight 1pc decline for the Dow and S&P 500 yesterday, putting the Dow into negative territory for the year, and futures pointed to almost a 1pc fall at opening.
The Stoxx Euro 600 Index dropped for a fourth day, with Germany's DAX gauge reaching an 11-month low, as carmakers slumped.
Mr Trump pushed back yesterday against a wave of criticism against his proposed steel tariffs, publishing a tweet saying "trade wars are good and easy to win."
The Bloomberg Dollar Spot Index declined 0.3pc, the largest drop in more than a week.