Global stock markets fell sharply on Tuesday after President Donald Trump threatened to impose an additional trade tariff on $200 billion worth of Chinese goods.

Following that bombshell, Chinese stock markets closed sharply lower. The volatile Shenzhen fell almost 6 percent, while the Shanghai Composite neared a two-year low.

European stocks followed suit and by mid-afternoon in London, the pan-European Stoxx 600 was 0.7 percent lower with all but two sectors trading lower.

U.S. stocks were next up and shortly after the open, the Dow Jones industrial average was lower by around 300 points, equating to about 1.2 percent.

The NASDAQ and S&P 500 indices also witnessed sharp sell-offs.

The trigger for selling was a Monday night request by Trump to the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs, at a rate of 10 percent.

Trump said Monday night that If China "refuses to change its practices" then the additional levies would be imposed on Beijing.