Global stocks plunged again today after Donald Trump declared a ‘war with the world’ and a new wave of US tariffs took effect – including a 104 per cent levy on Chinese imports and 10 per cent on those from the UK.
In London, the FTSE 100 fell more than 2 per cent after opening, wiping out most of the gains made on Tuesday, following another drop in some Asian stock markets overnight.
It followed heavy drops in Asia overnight, with Japan‘s stock index falling more than 5 per cent at one stage over fears of an all-out trade war.
The Nikkei 255 ended the day down 3.9 per cent at 31,714; the Hang Seng in Hong Kong lost 1.8 per cent to 19,769; and South Korea‘s Kospi fell 1.9 per cent to 2,291.
The Shanghai Composite index was trading roughly level at 3,141, while the S&P/ASX 200 in Australia declined 1.8 per cent to 7,375 and shares in New Zealand also fell.
Countries have been braced for potential economic damage from the import taxes on goods entering the US from midnight Washington time – just after 5am in the UK.
Chancellor Rachel Reeves hosted banking executives at No11 for breakfast talks about the impact of the tariffs this morning.
And later, opening a Universal theme park in Bedfordshire, she said the UK does not want to ‘see an escalation of tariffs’ that turns into a trade war.
Mr Trump told Republican politicians last night: ‘They ripped us off left and right. But now it’s our turn to do the ripping. And I do think that the war with the world, which is not a war at all, because they’re all coming here. Japan is coming here as we speak.
The President’s tariffs have shaken a global trading order that has persisted for decades, raised fears of recession and sent stock markets around the world reeling.
Chancellor Rachel Reeves, opening a Universal theme park in Bedfordshire, said the UK does not want to ‘see an escalation of tariffs’ that turns into a trade war.
‘They’re in a plane, flying lots of them, all tough negotiators, but things that people wouldn’t have given us two years ago … three years ago, five years ago, seven – they’re giving us everything. They don’t want tariffs on themselves.’
On Wall Street yesterday, the S&P 500 dropped 1.6 per cent after wiping out an early gain of 4.1 per cent. That took it nearly 19 per cent below its record set in February.
The S&P 500 has shed nearly $6trillion since Mr Trump unveiled the tariffs last week, the deepest four-day loss since the benchmark’s creation in the 1950s. The index is now nearing a bear market, defined as 20 per cent below its most recent high.
The Dow Jones Industrial Average dropped 0.8 per cent, while the Nasdaq composite lost 2.1 per cent. But the FTSE 100 in London rose 2.7 per cent to 7,911 yesterday.
In the UK, Ms Reeves insisted Britain was ‘accelerating trade deals with the rest of the world’.
The Chancellor and Business Secretary will later meet India’s finance minister for talks aimed at negotiating a deal with the country as the Chancellor said she wanted to create ‘the best possible conditions’ for British business in a ‘changing world’.
Prime Minister Sir Keir Starmer yesterday reiterated his call for a calm approach to the changed US trade policy as a sense of optimism returned to the financial markets after several days of heavy losses.
Beijing had vowed to ‘fight to the end’ and warned of countermeasures after Mr Trump threatened on Monday to raise his levies even further on the world’s second-largest economy.
However, US stocks slid during evening trading on Wall Street after the White House confirmed a 104 per cent tariff rate on some Chinese imports would become a reality.
Britain faces the lowest 10 per cent ‘baseline’ tariff rate and has resisted imposing immediate retaliatory action, unlike the European Union which is impacted by a 20 per cent import tax.
The Nikkei 255 ended the day down 3.9 per cent at 31,714; the Hang Seng in Hong Kong lost 1.8 per cent to 19,769; and South Korea ‘s Kospi fell 1.9 per cent to 2,291.
Ministers still hope an economic agreement with Washington can be reached to soften the blow of the levy which strikes UK goods, along with a 25 per cent import tax on cars and separate ones for steel and aluminium.
But the Government will also seek to strengthen trade ties with other countries, including by trying to rebuild ties with the European Union.
The Chancellor said: ‘In a changing world, this Government is accelerating trade deals with the rest of the world to back British business and provide the security working people deserve.
‘We are going further, faster to create the best possible conditions for British business by working to reduce barriers to trade.’
Discussions will focus on areas such as defence and jobs creation, investment and trade opportunities, she said.
The UK has been through more than a dozen rounds of talks since 2022 over a potential agreement with India, which is forecast to become the world’s largest economy.
Key sticking points were said to include visa rules for Indian students and professionals, as well as access for British service firms.
Speaking to MPs on Parliament’s Liaison Committee yesterday, the Prime Minister reiterated his opposition to immediate countermeasures in response to Mr Trump’s tariffs but said all options remained on the table.
President Donald Trump speaks at the National Building Museum in Washington DC yesterday
Chancellor Rachel Reeves, pictured during a visit to the Jaguar Land Rover factory in Birmingham on Mondayt, said Britain is ‘accelerating trade deals with the rest of the world’
Shipping containers are seen at a port in Nanjing in China yesterday amid the tariffs war
‘My instinct is that we shouldn’t jump in with both feet to retaliate. So in that sense, I’m not changing my plans,’ he said.
‘Obviously we have to keep our options on the table and do the preparatory work for retaliation if necessary. But I think that trying to negotiate an arrangement which mitigates the tariffs is better.’
But Sir Keir indicated he wants to protect the NHS from US commercial interests, and was also ‘very clear’ that a digital tax on big tech firms should remain in place, despite reports the levy could be abolished as part of a deal.
‘I have been very protective of the approach we take to the NHS in any dealings with any other country because it is our greatest asset, and we are not trading it away,’ he said.
The tariffs are not a ‘temporary passing phase’ but part of a ‘changing world order’, the Prime Minister added.
A 10 per cent import tax on goods coming into America from around the world kicked in on Saturday morning, while a 25 per cent levy on foreign cars had come into force on Thursday.
On Wednesday, the White House tariffs were introduced for about 60 countries it describes as the ‘worst offenders’ in terms of charging higher tariffs on US goods or implementing ‘non-tariff’ barriers to American trade.
These include the EU, China, Japan, Thailand, Vietnam, Cambodia, South Africa and Taiwan.
Mr Trump says the tariffs are necessary to narrow trade deficits, which measure how much more the US imports from other countries than it sends to them as exports.
In a speech to a Republican Congressional Committee dinner last night, he promised a ‘major tariff’ on pharmaceuticals would be announced ‘very shortly’, according to the BBC.
Speaking to broadcasters yesterday evening, health minister Stephen Kinnock said the global headwinds were ‘very turbulent’ and that rebuilding relations with Brussels would be key to protecting the UK.
‘We live in an incredibly deeply integrated global economy with very integrated supply chains and hugely interdependent commercial relationships, so nobody benefits from a trade war,’ he told Sky News.
He said the UK was focused on strengthening ties with the EU, developing an industrial strategy to enable Britain to ‘stand firmly on its own two feet’ and negotiating an agreement with the US.
‘I think the combination of those three things is going to help us to weather the storm,’ the minister said.
