NEW YORK: In what could be a grim preview of what’s to come if the world’s two largest economies square off in a trade war, shares in multinational corporations were hammered on Monday on both sides of the Pacific after a tweet from President Donald Trump.

That damage would almost certainly ripple outward and affect anyone who buys a refrigerator, a car, an iPhone, or anything else with a computer chip inside. Companies that import goods or parts from China may or may not pass on costs to consumers, but they usually act to offset rising costs somehow, including potential job cuts.

Goldman Sachs doubled the odds of auto tariffs are coming this year (to 20, and lessened the odds it gives to a free trade agreement between the US, Canada and Mexico.

“The President’s willingness to risk a market disruption by threatening an unexpected tariff hike suggests that he might also be willing to risk the disruption that formally proposing auto tariffs or announcing the intent to withdraw from Nafta might cause,” Goldman Sachs said in research published over the weekend.

The sector hit hardest by escalating trade tensions was technology, particularly companies that make computer chips. Micron Technology Inc, Advance Micro Devices Inc and Applied Materials Inc all slid 4 per cent at the opening bell. Other chipmakers were not far behind.

According to data provider FactSet, 64.7 per cent of Qualcomm’s revenue comes from China. Broadcom’s Chinese revenue is 48 per cent of its total.

Heavy hitters in the tech sector like Apple Inc, Amazon.com and Alphabet all lost ground. Apple gets nearly one-fifth of its revenue from world’s second largest economy.

But every sector was under pressure on Monday, from industrial to retail, and shares that were in retreat on Monday tracked closely with its exposure to China.

Wynn Resorts, with a host of casinos and hotels in Macau, gets about 75 per cent of its revenue from China, according to FactSet. Wynn shares tumbled 5 per cent.

Chinese companies were not immune to the damage.

Alibaba shares skidded close to 5 per cent and shares in Weibo — China’s version of Twitter — fell about 6 per cent.

On Sunday, President Trump tweeted that he would raise import taxes on $200 billion (Dh734.4 billion) in Chinese products to 25 per cent from 10 per cent as of Friday. That’s on top of a 25 per cent duty on another $50 billion of Chinese imports. Beijing has imposed penalties on $110 billion of American goods.

Trump’s announcement caused financial markets to plunge early, starting in Asia. The Shanghai Composite index closed 5.6 per cent lower and Hong Kong’s Hang Seng index sank 2.9 per cent on Monday.

The Dow fell 300 points at the opening bell, with the S&P 500 and Nasdaq sliding 1 per cent each.

In a note to clients, an analyst for Raymond James said that although Trump has in the past used the threat of more tariffs as negotiating leverage, that doesn’t appear to be the case this time. The analyst wrote that based on the firm’s discussions with trade sources, there is “universal belief” that any potential agreement fell apart in recent days, despite an agreement being close to finished last week.

A spokesman for the Chinese government said its envoys continue to prepare for a trip to the United States for trade talks, although there were concerns in the aftermath of Trump’s tweet that Beijing might back out to avoid looking weak in the face of American pressure.

“The most important near-term indicator to watch will be whether the large delegation of Chinese officials comes to Washington on May 8, as scheduled,” wrote Goldman Sachs analysts. “If they do, this would indicate that they believe a deal is still reasonably likely. In this case, the tariff rate would rise only if the two sides are unable to come to an agreement by Thursday, before the increase takes effect on Friday. Alternatively, if the upcoming visit is cancelled, an agreement in the coming week would then seem very unlikely.”