EU stocks close sharply lower after Trump stokes China trade war

European stocks plunged after U.S. President Donald Trump said he would slap a 10% tariff on the remaining $300 billion of Chinese imports from next month.

The pan-European Stoxx 600 was provisionally down 2.4% by the end of the session, basic resources and auto stocks falling 4.6% and 3.4% respectively as all sectors traded in the red. Tech stocks also among the biggest losers — dropping 3.6%.

Investors are rushing into safe haven assets after President Trump in a tweet on Thursday jettisoned a trade truce between the world’s two largest economies while talks over a resolution are ongoing.

Asian stocks plunged on Friday afternoon, with Japan’s Nikkei and Hong Kong’s Hang Seng index both falling more than 2% as all indexes fell sharply.

Chinese foreign ministry spokesperson Hua Chunying responded on Friday, saying that Beijing would have to take countermeasures if the U.S. was indeed committed to imposing new tariffs on Chinese goods.

Back in Europe, new British Prime Minister Boris Johnson suffered a blow Friday morning after the pro-European Union Liberal Democrat party won the parliamentary seat of Brecon and Radnorshire, in Wales, from the governing Conservatives.

The loss reduces Johnson’s working majority in parliament to just one ahead of an expected tussle with lawmakers over his plan to take Britain out of the European Union with or without an exit agreement on October 31.

EU finance ministers are in the process of voting for their nomination to replace Christine Lagarde at the helm of the International Monetary Fund (IMF), and are expected to announce their nominee on Friday.

As earnings season begins to wind down, a handful of major players reported earnings Friday morning.

British banking giant Royal Bank of Scotland (RBS) issued a £1.7 billion ($2.06 billion) dividend as it reported a net second-quarter profit of £1.3 billion ($1.57 billion) on Friday, beating the £1 billion forecast from Reuters. The bank’s shares traded 6.2% lower.

French lender Credit Agricole reported saw profits fall 15% to 1.22 billion euros on weak performance at its corporate and investment banking arm, causing its shares to fall 4.3%.

Allianz reported a 13.5% rise in second-quarter net profit on last year, coming in at 2.265 billion euros ($2.51 billion). The German financial services provider saw its shares slide 3% in afternoon trade.

Automotive parts supplier Valeo and Faurecia slipped near to the bottom of the Stoxx 600, while at the other end of the European blue chip index, Austrian plant engineering group Andritz climbed 5.9% after reporting strong second-quarter orders

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