TOKYO: Stocks and bond yields dropped as global investors reacted to the US imposing steep tariffs on Canada, Mexico, and China, escalating trade conflicts with its top three trading partners.

European stocks fell 1%, with automakers hit hardest, while aerospace and defense stocks reached record highs. Bond yields also declined, with US 10-year Treasury yields dropping to their lowest since October.

Riskier assets, including Bitcoin and the Australian dollar, lost ground. The MSCI world equity index dropped 0.2%, and the S&P 500 has fallen about 5% since its February peak.

Concerns about US growth intensified as tariffs compounded existing worries, including Trump’s decision to pause military aid to Ukraine.

China retaliated with 10%-15% tariff hikes on US agricultural products. Asian stocks mirrored Wall Street’s losses, with Japan’s Nikkei falling 1.6% and Taiwan’s benchmark down 0.5%.

Crude oil prices dropped after OPEC+ confirmed an output increase. Meanwhile, concerns grew about the US economy, especially with rising factory gate prices and longer delivery times due to tariffs.

Currency markets saw the Canadian dollar and Mexican peso weaken, while China’s yuan recovered. The euro and sterling held steady, and Bitcoin fell below $84,000.