‘Starting to hurt’: Trump’s tariffs smash ASX200

US President Donald Trump continued to send shockwaves through global markets as his tariff plan officially comes into effect on Wednesday afternoon.

The Australian sharemarket was smashed again on Wednesday as Donald Trump’s tariff plan on imports to the US officially came into effect.

The benchmark ASX200 index slumped on Wednesday down 103.90 points or 1.32 per cent to 7786.20, meanwhile the broader All Ordinaries fell by 100.80 points or 1.24 per cent to 8002.60

The Aussie dollar is buying around US62.89c.

US President Donald Trump tariff plans officially begin. Picture: NewsWire / Jim WATSON / POOL / AFP

In the latest development, Mr Trump’s 25 per cent tariffs on steel and aluminium imports came into effect on Wednesday afternoon, with no exemptions and a threat of doubling levies on steel and aluminium from Canada should they retaliate with a surcharge on electricity exports.

Australia reacted angrily to the decision not to allow an exemption on our $1bn in steel and aluminium exports to the US.

The European Union announced 26bn ($45.07bn) euros in retaliatory tariffs, which will come in two stages.

Firstly they will reimpose tariffs of 8bn euros ($13.87bn) on American products including Harley-Davison, bourbon and jeans, before imposing 18bn euros ($31.20bn) worth of further countermeasures subject to approval.

This led to the Australian index on the verge of entering a “technical correction” defined by at least a 10 per cent fall from a market high.

Australia’s $2.7 trillion index fell 9.6 per cent, or just short of $270bn from its peak, with another $50bn coming off Wednesday’s market, meaning the ASX200 has reversed a year’s worth of gains.

The decline was broad based with 10 of the 11 sectors finishing in the red, led by consumer discretionary, industrials and financials.

Financial heavyweights CBA slumped 1.44 per cent to $144.80, while NAB shares dropped 2.11 per cent to $33.38, Westpac shares fell 2.02 per cent to $30.07 and ANZ dropped 2.10 per cent to $28.41.

IG market analyst Tony Sycamore said the Australian banks had now dropped 14 per cent since mid-February.

“The banking sector is the biggest component of the ASX 200 as we know and it has been absolutely pulverised from those highs in mid-February.

“It has been the one that’s really leading the declines, just because it is the biggest sector on the ASX200.”

The ASX 200 was smashed on tariffs. Picture: NewsWire / Max Mason-Hubers

The materials sector also slumped with major miners BHP dropping 1.8 per cent to $38.95, Rio Tinto down 1.9 per cent to $117.23. Fortescue Metals bucked the trend up 1.46 per cent to $15.93 on late afternoon trading.

Mr Sycamore said tariffs had come in thicker and faster than markets anticipated leading to a “bitter” geopolitical backdrop.

“It’s starting to hurt, right,” he said.

“I think everybody’s now taking the view, we’re just going to have to sit through it and weather the storm, because this is when he can get through all these unpopular measures out of the way before providing some tax relief near the midterms.”

Australia’s market was not alone in the pullback.

Wall Street overnight on Tuesday, the S & P 500 closed 0.8 per cent lower, the technology-focused Nasdaq Composite Index finished down 0.2 per cent and the Dow Jones Industrial Average shed 1.2 per cent.

In corporate news patent and trademark business IPH shares dropped 10 per cent to $4.23 after the business announced chief financial officer John Wadley was leaving.

Originally published as ‘Starting to hurt’: Trump’s tariffs smash ASX200