'Brexit': What Britain's Exit From European Union Means To The U.S.

U.S. markets recoiled Friday over the vote by Britain to leave the European Union, opening sharply down and fueling uncertainty over the decision's impact on business and financial markets in the United States and across the world.

The so-called "Brexit" has unleashed financial and political turbulence on Europe and a secondary wave headed straight for American shores.

SEE ALSO: UK Votes To Leave The European Union: 5 Things Americans Should Know About 'Brexit'

Economic Impact

That wave crashed here this morning, sending the U.S. stocks plunging. The Dow Jones closed down 611 points Friday afternoon, while the S&P lost 3.6 percent and the Nasdaq composite index dropped 4.12 percent.

The exit is a wholly unprecedented event.

As USA Today reports, "The historic Brexit, which marks the first time a country has left the E.U., is viewed as the worse-case scenario for global financial markets. The market pain could be steep largely because global markets had bet on Britain voting to stay in the E.U."

So, it's a matter of expectations. But the other big challenge is uncertainty. Markets don't like it. And no matter how many financial advisers counsel against it, stocks will reflect investors' jitters as they respond to a giant unknown.

Robert W. Baird & Co. investment strategist Willie Delwiche tweeted out a cautionary note Friday morning: "It's a big bar for sure, but S&P not really breaking any new ground. Currently trading where we were 6 days ago."

Still, the long-term impact is a vast question mark. British Prime Minister David Cameron resigned the morning after the vote. Already there is talk of other countries following the United Kingdom's lead. And there's the simple fact that — having never had a country leave the E.U. — there is no blueprint for how the U.K. will extricate itself from its longtime partnership. It could mean recession for a fragile European economy, and the U.K. Treasury has predicted spending cuts, tax hikes and a potential spike in unemployment as it renegotiates the terms of trade and travel.

In the short term in particular, the uncertainty is sending shockwaves ricocheting through global stock markets and companies that do business with the U.K.

U.S. companies have invested $558 billion in the U.K., according to The Financial Times. And The International Business Times reports that major U.S. companies including EBay, Ford and Xerox have strong sales exposure in the U.K.

Political Fallout

Politically and financially, the great threat of the Brexit is the loss of the United States' primary bridge to Europe. American businesses often make their entrance to Europe through the U.K., and it has been a linchpin in U.S. foreign policy across the continent.

In a Telegraph editorial this April, President Barack Obama implored the country to remain part of the EU.

"The United Kingdom remains a friend and ally to the United States like no other," he wrote. "As citizens of the United Kingdom take stock of their relationship with the EU, you should be proud that the EU has helped spread British values and practices — democracy, the rule of law, open markets — across the continent and to its periphery. The European Union doesn’t moderate British influence — it magnifies it."

It thereby also magnifies U.S. influence, a chief concern for the president in a post-Brexit E.U.

"I will say, with the (candor) of a friend, that the outcome of your decision is a matter of deep interest to the United States," Obama wrote in April. "The tens of thousands of Americans who rest in Europe’s cemeteries are a silent testament to just how intertwined our prosperity and security truly are. And the path you choose now will echo in the prospects of today’s generation of Americans as well."

In a statement he made in the wake of the vote Friday, Obama reaffirmed the United States' commitment to work with both the European Union and United Kingdom in the days ahead.

The Brexit also matters to many who see anti-immigration strains in the debate as a parallel to the tenor of this year's presidential bid. For those, the vote cast Thursday is a worrying sign. Harvard University's Joseph Kennedy weighed in after the vote:

But on the other side of the political spectrum, the U.K.'s vote is seen as a bold act of independence.

Presumptive Republican presidential nominee Donald Trump cheered the decision in a statement Friday morning.

"They took their country back. We will take America back," he wrote. "Come November, the American people will have the chance to re-declare their independence."

In contrast, Democratic nominee Hillary Clinton responded: "We respect the choice the people of the United Kingdom have made. Our first task has to be to make sure that the economic uncertainty created by these events does not hurt working families here in America."

Both pledged to continue America's role as strong ally to the U.K.

Patch will update this story. Please hit refresh as we add information to this developing story.

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