Markets around the world continued to deal with the fallout out of US President Donald Trump's tariff policy on Monday, as he backed up last week's announcement by saying "sometimes you have to take medicine to fix something", despite growing concern it could trigger a global recession.

Hong Kong's Hang Seng index fell by 13.22 percent, its worst one-day loss this century, with Agence France Presse reporting that it was the biggest fall since the 1997 Asian financial crisis, and when markets in Europe opened, they too were heavily hit, suffering their biggest losses since the start of the pandemic in 2020.

In London, the FTSE 100 ended the day 4.4 percent down, having earlier been 5.1 percent down, while Germany's DAX suffered even worse, slumping by more than 10 percent at one point, before ending the day 4.3 percent down. In France, the CAC 40 fell by 4.8 percent.

"The bloodbath is in full swing, and that's exactly what you see when you look at the European markets", said a note from Zaye Capital Markets to Euronews. "There is no safe haven; equity markets have entered a complete free-fall with no clear bottom in sight."

The reason for this, the note continued, was that "none of the underlying fundamentals suggest that the trade war is coming to an end. In fact, in many ways, it appears the conflict has only just begun".

The BBC's economics editor, Faisal Islam, said initial responses had been based on assumptions Trump would react to the markets, and adjust his policy as a result, and that it was being used to start deal negotiations.

"As a result of Trump's comments over the weekend, and those he made on Air Force One last night, both those assumptions are now up for question," causing "violent" market reaction, he added.

Trump has shown no indication he will reverse the policy, despite heavy criticism, even from his own supporters.

Billionaire hedge fund manager Bill Ackman, who endorsed Trump in last year's presidential race, saying he had made that choice "carefully, rationally, and by relying on as much empirical data as possible", said Trump's refusal to change tack would lead to "a self-induced, economic nuclear winter".

But on Sunday, Trump wrote on his Truth Social media platform: "We have massive financial deficits with China, the European Union, and many others. The only way this problem can be cured is with tariffs, which are now bringing tens of billions of dollars into the USA."

Canada's Prime Minister Mark Carney likened what lay ahead for the US to the experience of the United Kingdom leaving the EU, something he had to deal with in his former job as governor of the Bank of England.

"It took some time for the impacts of Brexit to filter through to the UK economy, but I have seen this movie before," he said. "I know exactly what is going to happen … The Americans are going to get weaker."

[email protected]