US tariffs on $34bn of Chinese goods have come into effect, officially confirming the long anticipated trade war between the world’s two biggest economies. China immediately retaliated by executing a similar 25% tariff on 545 US products, also worth a total of $34bn.

Beijing has accused the US of beginning the “largest trade war in economic history” and the impact has already started to show with assets across emerging markets in decline. Meanwhile, Russia has also said that it will introduce extra duties on a range of products imported from the US in response.

The war of words between the world’s biggest economies over trade also added fuel to a sell-off sparked by a climbing dollar and hawkish central banks in developed economies. It sent a Bloomberg currency index that measures carry-trade returns from eight emerging markets, funded by short positions in the dollar, tumbling the most on a quarterly basis since 2011.

Emerging-market stocks and currencies dropped the most since 2015 in the three months through June, and a Bloomberg Barclays index of local-currency bonds posted its first quarterly retreat since 2016. Both the equity and currency gauges extended their declines on Monday, with the latter heading for its lowest since August.

Businesses have also raised concerns over the tariffs. Wireless speaker brand Sonos has been vocal about it’s worries that a US-China trade war could have a serious impact on its business.

“If significant tariffs or other restrictions are placed on Chinese imports or any related counter-measures are taken by China, our revenue and results of operations may be materially harmed,” the group said in its initial public offering filing with the US Securities and Exchange Commission.

Businesses that import and export goods are highly sensitive to fluctuations in the market. But even if you trade domestically, you still have an indirect currency risk by the state of the wider economy.

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