Global stocks slumped again Friday, while U.S. equities extended losses, as investors reacted to both U.S. President Donald Trump's plans to impose strict import tariffs on steel and aluminum and another round of hawkish testimony from Federal Reserve Chairman Jerome Powell.

U.S. equity futures attempted to stabilise in early trading, following yesterday's sharp declines that loped more than 400 points from the Dow Jones Industrial Average and clipped 1.33% from the broader S&P 500, but that view changed as European shares slumped and impact of Trump's trade strategy became clearer to global investors.

Contracts tied to the Dow suggest an implied opening decline of 130 points while those tied to the broader S&P 500 were marked 9.25 points lower from last night's close while Nasdaq futures were priced 27.25 points to the downside.

Trump's aim to curb foreign imports and protect U.S. jobs has investors around the world deeply concerned about a global trade war, with officials in Canada, Germany and China vowing to respond in kind if the President follows through on this rhetoric with a formal announcement next week.

"We have felt that investors in recent weeks may have been viewing the risks around US trade policy with rose-tinted glasses," analysts at ING noted. "One of those assumptions is the strength of the global economy - and certainly, the prospect of a 'global trade war' and heightened geopolitical tensions could temper some of the optimism and see greater two-way risks to global growth."

European steelmakers fell sharply Friday, while regional auto and aerospace stocks extended declines, as investors re-priced stocks in the wake of planned tariffs, with ArcelorMittal falling 4.2% in the opening hour of trading in Amsterdam to change hands at €26.55 while Germany's ThyssenKrupp AG (TKAMY) , the second-largest in Europe, was marked 3.3% to the downside in Frankfurt, extending its year-to-decline to around 10%. Domestic rival Salzgitter AG (SZGPY) slipped 3.4% to €44 each.

Markets were further unsettled by Powell's second appearance on Capitol Hill this week, during which he suggested that the Fed could hike rates as many as four times this year as the economy continues to improve, a view that was partly supported by firm reading of the Fed's preferred inflation gauge, the PCE index, earlier Thursday. 

The Stoxx Europe 600 benchmark fell 1.1% to a three week low of 370.11 points while Germany's DAX performance index, which is heavily-reliant on U.S. exports, tumbled more than 1.6% to a six-month low of 11,968 points.

Overnight in Asia, a sharp pullback in U.S. Treasury bond yields, which fell to a three-week low of 2.811%, pushed the U.S. dollar index lower and, along with broader concerns over trade disputes, held down gains for regional benchmarks.

Japan's heavily export-focused Nikkei 225 fell 2.5% amid a surge in the yen, taking the benchmark to 21,181.64 points by the close of trading. The region-wide MSCI Asia ex-Japan index was marked 0.83% lower at 571.41 points.

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