People stand by an electronic stock board in Tokyo on June 18. (Koji Sasahara/AP)

European markets opened down and Asian ones dipped dramatically after President Trump threatened China with tariffs on $200 billion in products, renewing fears of an all-out trade war that could hit the global economy.      

Stock markets across Asia fell Tuesday, with Shanghai closing down 3.78 percent, its biggest drop in two years, and Shenzhen down 5.31 percent. Hong Kong’s Hang Seng Index (HSI) closed down 2.76 percent, while Japan’s Nikkei lost 1.77 percent and Korea’s Kospi Index was down 1.54 percent. 

Major European markets also opened down across the board; benchmarks in London, Paris and Frankfurt fell between 0.4 percent and 1.3 percent in early Tuesday trading. 

“Asian countries that have close trade ties to China such as South Korea and Japan are bracing for side effects of the trade war,” said Park Jin-woo, a researcher at Seoul’s Center for Trade Studies at the Korea International Trade Association.

Dips in Asia, and then in Europe, sparked concern that U.S. markets could also take a Tuesday morning hit. “U.S. markets are on course for another day in the red as we await the open on Tuesday, with futures down more than one percent as U.S. President Donald Trump threatens to intensify the trade spat with China,” wrote Craig Erlam, a senior market analyst at Oanda, a provider of online foreign exchange services, in a research note.  

For months now, the United States and China have been exchanging ever-escalating threats.

Last Friday, the Trump administration announced a 25 percent tariff on up to $50 billion of Chinese products, prompting Beijing to respond with a 25 percent tariff on $34 billion of U.S. goods.

On Monday, the Trump administration responded with an unprecedented threat to levy a 10 percent tariff on $200 billion in Chinese products — a move that would put a large share of the $505 billion in products that the United States imports from China under tariffs.

“The trade relationship between the United States and China must be much more equitable,” Trump said. “The United States will no longer be taken advantage of on trade by China and other countries in the world.”

In a statement published shortly after Monday’s announcement, China’s Ministry of Commerce called the move “blackmail.”

China imports less than the $200 billion in U.S. goods, so it will not be able to match the threat exactly, but the ministry vowed to find other ways. 

“If the U.S. loses its senses and publishes a new list, China will be forced to take comprehensive measures that are both strong in quantity and gravity and will fight back,” the statement said.

At a daily press briefing, Geng Shuang, a spokesman for the Chinese Foreign Ministry, reiterated that threat. “We don’t want a trade war, yet we are not afraid of a trade war,” he said. 

“We advise the U.S. to remain rational and stop word and deeds that harm itself and others,” he added. “This is the only viable way out.”

Griff Witte in London, Brian Murphy and Min Joo Kim in Seoul and Amber Wang in Beijing contributed to this report