Global markets fell after US President Donald Trump announced plans to escalate his global trade war, by threatening Europe with further tariffs.

Market snapshot at 8:15am (AEDT): ASX SPI futures -0.2pc at 6,185, ASX 200 (Tuesday's close) flat at 6,222

ASX SPI futures -0.2pc at 6,185, ASX 200 (Tuesday's close) flat at 6,222 AUD: 71.24 US cents, 54.56 British pence, 63.23 euro cents, 79.17 Japanese yen, $NZ1.06

AUD: 71.24 US cents, 54.56 British pence, 63.23 euro cents, 79.17 Japanese yen, $NZ1.06 US: Dow Jones -0.7pc at 26,151, S&P 500 -0.6pc at 2,878, Nasdaq -0.6pc at 7,909

US: Dow Jones -0.7pc at 26,151, S&P 500 -0.6pc at 2,878, Nasdaq -0.6pc at 7,909 Europe: FTSE 100 -0.4pc at 7,426, DAX -0.9pc at 11,851, CAC -0.7pc at 5,436, Euro Stoxx 50 -0.6pc at 3,417

Europe: FTSE 100 -0.4pc at 7,426, DAX -0.9pc at 11,851, CAC -0.7pc at 5,436, Euro Stoxx 50 -0.6pc at 3,417 Commodities: Brent crude -0.4pc at $US70.83/barrel, spot gold flat at $US1,304.26/ounce, iron ore -0.5pc at $US94.85/tonne

Also contributing to the market anxiety was the International Monetary Fund's (IMF) latest report, which downgraded its expectations for global economic growth — with Australia's economy in particular underperforming.

On Wall Street, the Dow Jones index fell 190 points, down 0.7 per cent to 26,151. The S&P 500 and Nasdaq indices each finished 0.6 per cent lower.

It was also a sea of red for European markets, with moderate to sharp losses for London (-0.4pc), Paris (-0.7pc) and Frankfurt (-0.9pc).

Trump to impose further tariffs

On Tuesday (local time), Mr Trump said he would impose tariffs on $US11 billion worth of European Union imports, heightening tensions over a long-running transatlantic aircraft subsidy dispute.

Mr Trump's public attack on the EU came even as his administration has yet to hammer out trade deals with China, and its neighbours Mexico and Canada.

Europe has accused the US of granting illegal aid to Boeing, offering it an unfair advantage in the global aviation business — while the US has accused Europe of the same thing, but in relation to the Netherlands-based Airbus.

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The case, which has been grinding its way through the World Trade Organisation (WTO) for almost 15 years, is approaching the final stages of arbitration.

Both sides have won partial victories in claiming Airbus and Boeing received unlawful subsidies but disagree on the amount involved and whether each has complied with earlier WTO rulings.

"The World Trade Organisation finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products!" Mr Trump said on Twitter.

"The EU has taken advantage of the US on trade for many years. It will soon stop!"

In response, the European Commission said it was preparing to retaliate against the US.

"The Commission is starting preparations so that the EU can promptly take action based on the arbitrator's decision on retaliation rights in this case," a European Commission spokesman said.

"The European Union remains open for discussions with the United States, provided these are without preconditions and aim at a fair outcome."

The EU is already facing US tariffs on its steel and aluminium exports and Mr Trump has repeatedly threatened to hit EU cars with punitive duties.

Australian economic slowdown to worsen

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 44 seconds 44 s IMF downgrades outlook for Australian and global economy.

The global economy is slowing more than expected and a sharp downturn could require world leaders to coordinate stimulus measures, the IMF said on Tuesday, while cutting its forecast for world economic growth this year.

In its third downgrade since October, the IMF said the global GDP will likely grow 3.3 per cent this year, the slowest expansion since 2016.

This forecast shaved 0.2 percentage points from the IMF's previous outlook (3.5 per cent) in January.

But the IMF was even more downbeat about Australia's economy, which is expected to grow at a much slower rate of 2.1 per cent this year.

This falls short of what the Federal Government has forecast in its Budget, and is much lower than the IMF's previous forecast of 2.8 per cent (last year).

The IMF pointed to the US-China trade war and a potentially disorderly British exit from the European Union as key risks and warned that chances of further cuts to the outlook were high.

Some major economies, including China and Germany, might need to take short-term actions, the IMF said.

"This is a delicate moment for the global economy," IMF chief economist Gita Gopinath said in a news conference to discuss the report.

Governments may need to open their pocketbooks at the same time "across economies" if the slowdown becomes more serious, Ms Gopinath said, adding that loose monetary policy might also be needed.

ABC/Reuters