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Apple faces the prospect of paying almost $1bn in extra costs thanks to Donald Trump’s trade war, its boss has said.
Tim Cook, the tech giant’s chief executive, told analysts on Thursday: “Currently we are not able to precisely estimate the impact of tariffs as we are uncertain of potential future actions...if no new tariffs are added we estimate the impact to add $900m to our costs.”
Apple has been caught up in Donald Trump’s tariff blitz, with millions of iPhones sold in China every month. Many of Apple’s biggest suppliers, such as Foxconn, make its products in China.
Last month, Mr Trump exempted smartphones and computers from his most punishing duties on China, although the products are still subject to a 20pc levy as part of the President’s so-called “fentanyl” tariff.
The California giant has begun shifting manufacturing for iPhones destined for the US to India, in order to avoid the worst of the levies.
Apple’s shares dipped 1.8pc as its China sales just missed forecasts. Its China sales came in at $16bn, slightly down on the previous year. Analysts at Emarketer said Apple’s better-than-expected iPhone sales could be down to consumers attempting to get ahead of America’s tariff crackdown.
However, the company surprised the market with better than expected sales of iPhones over the first three months of 2025.
Apple reported net sales of $95.4bn, up 5pc, and net profit of $24.8bn. Its iPhone sales of $46.8bn came well ahead of Wall Street expectations.
The surge in sales suggests people may have rushed to buy new gadgets ahead of the tariffs taking effect, amid fears that the trade war will lead to a significant rise in prices.
Elsewhere, Amazon has warned Donald Trump’s trade war risks hurting sales as billionaire owner Jeff Bezos battles to contain the fallout from an explosive White House row.
The e-commerce giant saw shares slide late on Thursday after its profit outlook for the coming months disappointed Wall Street.
Mr Bezos’ company highlighted the risks posed by Mr Trump’s policies, adding a new warning to its financial outlook that “tariff and trade policies” threatened its sales.
The results come after Amazon was forced to deny reports that it was planning to add information about the impact of US tariffs on its prices to customer receipts.
Mr Trump personally called Mr Bezos in a rage to complain over the proposal, The Telegraph reported.
Amazon insisted that its Haul team, its low-cost division aimed at challenging China’s Temu, had “considered the idea” but that it was “never approved and not going to happen”.
White House officials on Tuesday attacked Amazon for a “hostile and political act”, with Karoline Leavitt, the White House press secretary, accusing Amazon of working with a “Chinese propaganda arm”.
The clash has threatened to derail the relationship between Mr Bezos and Mr Trump. The Amazon founder, who owns the Washington Post, has sought to build ties with the Republican leader.
He banned the newspaper, which he has owned since 2013, from endorsing a presidential candidate in last year’s election. Previously, the paper backed Joe Biden and Hilary Clinton.
Amazon reported sales of $155.7bn in the first three months of the year, up 9pc, and net profits of $17.1bn. However its second quarter earnings outlook - of between $13bn and $17.5bn of earnings - was much lower than expected. Shares fell 5.4pc.
The company has also been battling a surge of interest in Temu, the low-cost Chinese shopping app that promises its users can “shop like a billionaire”.
While Mr Trump’s tariffs on China of up to 145pc threaten to torpedo Temu’s growth, they will also hit companies like Amazon, whose sellers often import their goods from China.
Due to its size and exposure to consumer spending, Amazon’s results are closely watched for signs of a market slowdown. On Wednesday night, Amazon reported a 17pc increase in sales at its Amazon Web Service division, its data centre arm, to $29.3bn. Sales in its bricks and mortar stores hit $5.5bn.
Andy Jassy, Amazon’s chief executive, said: “We’re pleased with the start to 2025, especially our pace of innovation and progress in continuing to improve customer experiences.”
11:06 PM BST
Signing off...
That’s it for tonight. Thanks as always for joining us.
Read on for more business news and analysis.
10:28 PM BST
Apple facing major cost increase thanks to tariffs
The iPhone maker will have to swallow almost $1bn in extra costs in the third quarter thanks to Donald Trump’s trade war, its boss, Tim Cook, has said.
He told analysts: “Currently we are not able to precisely estimate the impact of tariffs as we are uncertain of potential future actions...if no new tariffs are added we estimate the impact to add $900m to our costs.”
10:18 PM BST
Amazon boss: signs of ‘heightened buying’ in first quarter
Andy Jassy, Amazon’s chief executive, told analysts this evening: “Obviously none of us knows exactly where tariffs will settle or when. We haven’t seen any attenuation of demand.”
He added the company had seen “some heightened buying in certain categories” that could indicate consumers stocking up.
10:16 PM BST
Amazon results ‘solid’ despite tariff warnings
Here’s Neil Saunders, retail analyst at GlobalData, on Amazon’s first quarter results.
10:13 PM BST
Apple boosted by customers stocking up ahead of tariffs
Apple’s shares dipped 1.8pc as its China sales just missed forecasts. However, the California giant surprised the market with better than expected sales of its iPhone.
Apple reported net sales of $95.4bn, up 5pc, and net profit of $24.8bn. Its iPhone sales of $46.8bn came well ahead of Wall Street expectations.
The surge in sales suggests people may have rushed to buy new gadgets ahead of the tariffs taking effect, amid fears that the trade war will lead to a significant rise in prices.
Apple has been caught up in Donald Trump’s tariff blitz, with millions of iPhones sold in China every month. Many of Apple’s biggest suppliers, such as Foxconn, make its products in China.
Its China sales came in at $16bn, slightly down on the previous year. Analysts at Emarketer said Apple’s better-than-expected iPhone sales could be down to consumers attempting to get ahead of America’s tariff crackdown.
Last month, Mr Trump exempted smartphones and computers from his most punishing duties on China, although the products are still subject to a 20pc levy as part of the President’s so-called “fentanyl” tariff.
The California giant has begun shifting manufacturing for iPhones destined for the US to India, in order to avoid the worst of the levies.
08:28 PM BST
Investors await Apple earnings amid tariff uncertainty
Investors will shortly be given a better idea of how Donald Trump’s trade wars are impacting one of the US’s biggest tech firms. The California-based company is expected to post a 4.2pc rise in revenue for this quarter.
Apple shares have climbed steadily in the last week, but there are still worries as the economic shockwaves generated by Mr Trump’s trade war continue to ripple through the markets.
Tariff exemptions for smartphones and other electronics have eased some concerns, but little is certain. Adding to worries is the fact that a number of other high-profile US firms have ditched previous guidance.
Kevin Cook, senior strategist at Zacks Investment Research, said: “Exemptions gave Apple some breathing room, but it remains in the hot seat, and there’s still so much that’s so hard to predict.
08:07 PM BST
Trump vows clampdown on purchases of Iranian oil
Donald Trump has threatened sanctions for any country or person buying oil or petrochemicals from Iran.
He wrote on his Truth Social network: “They will not be allowed to do business with the United States of America in any way, shape, or form.”
It comes after talks between the US and Iran over the Iranian nuclear program which were due to take place in Rome this weekend were postponed.
06:55 PM BST
FTSE flat at close
Britain’s benchmark index was flat at close this evening following a mixed bag of results.
Best performers included Rolls-Royce, which rose 1.7pc after it claimed it would be able to offset global tariffs and hit its 2025 profit targets.
Whitbread, the hospitality giant behind Premier Inn, surged by 5.8pc as it unveiled a share buyback plan and a positive outlook despite ongoing concerns around higher taxes following the Chancellor’s October Budget weighing on the hospitality sector.
Other risers included publishing group Informa (up 4.2pc) and consumer goods maker Haleon (3.3pc).
Fallers included Lloyds Banking Group, which dropped by 2.7pc after it posted a near 7pc decline in profits for the first quarter.
06:14 PM BST
Easing US interest rates would be ‘very serious error’
Former US Treasury secretary Lawrence Summers has said it would be a “very serious error” for policymakers to ease interest rates next week.
He told Bloomberg TV: “It would have been a grave mistake to have eased already, and would be a very serious error to ease at this upcoming meeting.”
He argued that a cut would undermine confidence in the Fed’s determination to bring down inflation and could cause longer-term borrowing costs to climb.
US inflation is still running above the Fed’s 2pc target, while the American economy has been sent reeling by Donald Trump’s trade war.
Trump and Fed chair Jerome Powell have spent recent weeks at loggerheads, with Mr Trump heaping pressure on Mr Powell to cut interest rates.
04:31 PM BST
Trump’s trade war hammers his favourite restaurant chain
Donald Trump’s trade war has delivered a blow to a chain that has been a longstanding favourite of the US president, writes senior business reporter Daniel Woolfson.
Mr Trump is reported to eat its food frequently, sometimes going without breakfast or lunch ahead of a McDonald’s feast for dinner.
03:55 PM BST
General Motors cuts profit forecast as trade war bites
General Motors has slashed its profit forecasts for 2025 amid discussions with the White House over tariffs.
The Detroit-headquartered car manufacturer ditched a previous forecast made in January that did not take into account tariffs levied on the car industry by the Trump administration.
It now expects annual adjusted profits of between $10 billion and $12.5 billion, including a current tariff exposure of between $4 billion and $5 billion - assuming it can offset at least 30pc of tariff costs.
Its chief financial officer Paul Jacobson said: “Since the election, our manufacturing and supply chain teams have been focused on developing strategies to help mitigate the impact of potential tariffs.
“These strategies are now actively being put into action ... we’ll take additional mitigation measures, including cost reduction targets, where it makes sense to do so.”
03:30 PM BST
US factory exports fall at fastest pace since pandemic as Trump tariffs backfire
US manufacturers suffered their largest drop in exports since the pandemic, a closely watched survey shows, as Donald Trump’s tariff tirade backfired.
American factories reported the biggest fall in new export orders since April 2020, according to the ISM Manufacturing PMI, which measures output in the sector.
Overall activity declined for a second month in a row, the survey showed, slipping to 48.7pc from 49pc the previous month. A reading below 50pc indicates a contraction in activity.
President Trump has said his tariff tirade against trading partners is aimed at encouraging manufacturers to make more things in the United States.
Timothy R Fiore, chair of the ISM manufacturing business survey committee, said weakening demand had combined with increasing deliveries stockpiles, prices and imports, which he said were “conditions that are not considered positive for economic growth”.
He added: “Demand and production retreated and destaffing continued, as panelists’ companies responded to an unknown economic environment.
“Prices growth accelerated slightly due to tariffs, causing new order placement backlogs, supplier delivery slowdowns and manufacturing inventory growth.”
03:07 PM BST
McDonald’s sales flip lower as tariffs trigger uncertainty
McDonald’s US sales fell by the most in five years as diners were gripped by “uncertainty” amid Donald Trump’s trade war.
The fast food giant’s global comparable sales dropped 1pc between January and March, driven by a 3.6pc slump in the US – the biggest since the pandemic.
Without the impact of the extra leap year day in 2024, same-store sales were flat, the company said.
Wall Street had been expecting an increase of nearly 2pc, according to analysts polled by FactSet.
Chris Kempczinski, the chief executive, said the fast food chain was navigating the “toughest of market conditions”.
He said: “Consumers today are grappling with uncertainty, but they can always count on McDonald’s for both exciting new menu items and delicious favorites for exceptional value, from a brand they love.”
Falling guest count in the US was blamed for the downturn, while the UK was also singled out for a drop in sales.
McDonald’s shares fell 1.4pc on Wall Street as net income dropped by 3pc to $1.9bn (£1.4bn).
02:45 PM BST
Microsoft and Meta surge after strong results
Microsoft shares surged after it delivered profits for the start of the year that were even bigger than analysts expected.
The tech giant’s shares leapt 10pc higher at the opening bell, while Facebook owner Meta also climbed 5.1pc as it outperformed forecasts.
The two companies are members of the so-called Magnificent Seven group of stocks which have powered gains on Wall Street in recent years.
02:34 PM BST
US stocks rise at the opening bell
Wall Street stock indexes rose at the opening bell as traders brushed off concerns about a potential US recession.
The Dow Jones Industrial Average gained 0.3pc to 40,804.40 while the benchmark S&P 500 jumped 0.9pc to 5,616.63.
The tech-heavy Nasdaq Composite climbed 2pc to 17,793.87.
02:22 PM BST
US and China in ‘loose discussions’ on trade, says White House official
One of Donald Trump’s top officials has said he was hopeful for progress with China on trade.
White House economic adviser Kevin Hassett said there had been “loose discussions” between both governments while noting that he personally had not had any talks with Chinese officials.
“We’re hopeful for progress,” Hassett told CNBC, after it emerged both the US and China had created exemptions to their tariffs.
“I think that the fact that the tariffs came off last week shows that we’re very close to making the kind of progress we need to move the ball forward.”
01:50 PM BST
Traders ramp up bets on interest rate cuts
Money markets have today priced-in four interest rate cuts by the Bank of England this year amid fears the US economy is at risk of recession.
Traders hiked bets on policymakers reducing borrowing costs ahead of the next meeting of the Monetary Policy Committee next week.
Rate setters are expected to announce a quarter of a percentage point fall from 4.5pc to 4.25pc next week, with further cuts by August, September and December.
01:34 PM BST
Harley-Davidson pulls profit forecast amid ‘uncertain global tariff situation’
Harley-Davidson has pulled its profits forecast for this year, blaming a lack of clarity brought on by Donald Trump’s trade policy.
The motorcycle manufacturer had previously forecast revenue to fall by as much as 5pc for the year and had suffered a 30pc decline in its share price in the last six months amid tumbling sales.
It said: “Due to the uncertain global tariff situation and macroeconomic conditions, we are withdrawing our full year 2025 financial outlook.”
In its first quarter results, it said global motorcycle retail sales fell 21pc compared to the same time last year as the “volatile macroeconomic environment and overall consumer uncertainty” hit demand.
Chief executive Jochen Zeitz notified the board last autumn of his intention to step down and is currently fending off calls from one of the company’s shareholders for his immediate removal.
He said: “We remain focused on navigating the challenging economic and tariff environment, through diligent execution of our cost productivity measures, supply chain mitigation, tight operating expense control and reducing dealer inventory.
“In addition, we remain committed to driving retail sales through increased marketing initiatives as we enter the riding season.”
01:16 PM BST
Bessent urges Federal Reserve to cut interest rates
The US treasury secretary urged the Federal Reserve to cut interest rates a day after figures showed the US economy shrank for the first time in three years under Donald Trump.
Scott Bessent said lower borrowing costs were justified by falling yields in bond markets and the recent “great inflation numbers” showing the pace of consumer price rises slowed from 2.8pc to 2.4pc in March.
“We’re seeing that two-year rates are now below fed funds rates, so that’s a market signal that they think the Fed should be cutting,” he told Fox News.
The two-year Treasury bond yield – a benchmark for short-term government borrowing costs – has fallen to 3.59pc, compared to the Fed’s interest rate range of 4.25pc to 4.5pc.
Bessent’s comments come after President Trump renewed his criticism of Fed chairman Jerome Powell earlier this week, telling crowds at a rally in Michigan: “I have a Fed person who’s not really doing a good job”.
He said: “You’re not supposed to criticise the Fed. “You’re supposed to let him do his own thing — but I know much more than he does about interest rates.”
01:04 PM BST
Bessent brushes off recession worries amid ‘confidence’ over US-China trade deal
Scott Bessent dismissed suggestions the US economy was at risk of recession and said he was confident China will want to reach a deal on tariffs.
The US treasury secretary said markets “should take a deep breath” amid the uncertainty caused by Donald Trump’s trade policy, a day after official figures showed the American economy contracted for the first time in three years during the first quarter.
He said there were “anomalies” in the GDP figures, which he expected would be revised.
“We’re not going to fix this overnight, but I do think uncertainty will go away,” he told Fox Business Network.
Bessent said the US will likely revisit President Trump’s phase one trade deal with China.
“I am confident that the Chinese will want to reach a deal,” he said, hours after signing a contentious rare earth minerals deal with Ukraine after weeks of wrangling.
“And as I said, this is going to be a multi-step process. First, we need to de escalate, and then the over time, we will start focusing on a larger trade deal.”
12:43 PM BST
Pound rises as US faces recession risk
The pound edged back towards a three-year high against the dollar amid concerns the US is at risk of a recession.
Sterling gained 0.1pc to $1.334 despite figures showing factory activity in Britain shrank for a seventh month in a row in April.
The pound touched its highest level since February 2022 on Monday, having risen 3.2pc last month in its biggest monthly gain against the dollar since November 2023.
Donald Trump’s trade polices have rocked confidence in US assets, while official figures showed the American economy contracted for the first time since 2022 during the first three months of this year.
Jane Foley, an analyst at Rabobank, said the chances of a US recession were now larger than 50pc.
However, she said the dollar could be given a boost later this year as a result of inflation risks associated with tariffs, which would mean the Fed will cut rates fewer times than the four reductions priced in by markets before the end of the year.
She said: “China’s defiance in the face of the trade war with the US has forced the market to reassess the strengths and vulnerabilities of both sides.
“As a result, speculation that it might be the US, rather than China, that blinks first has gathered some support.
“Both of these factors suggest that Trump’s hand in driving deals with the US’ trading partners may not be as strong as he had expected.
“If this increases the chances of trade deals being announced in the coming months, markets sentiment will likely improve.”
12:22 PM BST
Carney won Canada. Saving the country from Trump won’t be so easy
Mark Carney has engineered one of the most unlikely victories in political history, saving Canada’s Liberal Party from near oblivion and going from the outskirts of politics to prime minister in a matter of months, writes Emma Taggart.
But the former Bank of England governor’s biggest challenge still lies ahead: protecting Canada’s economy from Donald Trump.
Mr Trump has repeatedly claimed Canada will become the “cherished 51st state” and levied heavy tariffs on the US’s northern neighbour. In his victory speech Carney said Trump “is trying to break us so America can own us. That will never happen”.
11:59 AM BST
Tariffs risk access to minerals used in AI race, warn economists
The global trade war triggered by Donald Trump’s tariffs has raised concerns about how dependent wealthier nations are on China and Africa for critical rare earth minerals used in the race to develop artificial intelligency.
The AI race has driven Western countries to rapidly expand data centre capacity and guard tech sovereignty with export controls, according to Bradley Rogoff and Ajay Rajadhyaksha of Barclays.
However, their AI ambitions could be scuppered unless the same attention is given to supply chains, the economists said.
“Winning the AI race is not just about energy; it also hinges on access to a global pool of resources, especially critical minerals and human talent,” they wrote to clients.
“China holds a near-monopoly in rare earths and a dominant position in processed minerals such as lithium and cobalt, but most of the raw materials themselves come from a few developing economies.”
The economists warned that “geopolitical conflicts, trade wars and natural disasters can turn dependencies into vulnerabilities”, with critical mineral dependencies being the “true linchpin” in the AI supply chain.
China supplies nearly half of the world’s processed minerals, including 65pc of refined lithium, 80pc of refined cobalt, and almost 90pc of magnet rare earths, while Chinese companies control approximately 40pc of the world’s nickel and cobalt mines.
Over 60pc of critical raw minerals for AI hardware comes from a few emerging and developing economies, such as the Democratic Republic of Congo producing 73pc of the world’s raw cobalt ores and Guinea being the source of 70pc of the aluminium ores.
The economists wrote: “The dependencies we identified highlight that diversifying and securing resilient mineral supply chains will be a major challenge for developed nations. This issue is intensified by recent tariff uncertainties.”
China imposed restrictions on rare earth metals and magnets in response to Washington’s tariffs in early April, prompting the Trump administration to announce an investigation on April 15 threatening reciprocal tariffs targeting critical minerals which have so far been exempt.
“Investors have stopped focusing on data flow; the only thing that matters is the next news release on tariffs,” the economists wrote.
11:40 AM BST
Oil plunges as Saudi Arabia prepares for spell of low prices
The price of oil sank below $60 a barrel again after Saudi Arabia signalled it is prepared to ramp up output and swallow lower prices.
Brent crude dropped 2.8pc towards $59 amid signs the kingdom could be aiming to expand its market share after several years propping up the industry.
Saudi Arabian officials have been briefing allies and industry experts that the kingdom is unwilling to prop up the oil market with further supply cuts and can handle a lengthy spell of low prices, according to Reuters.
Crude had already sunk 16pc in April after the Opec+ cartel of oil-producing nations rocked markets by pumping more crude than expected.
The price was also impacted by concerns about demand from China, the world’s top importer of crude, amid Donald Trump’s trade war.
Official figures on Wednesday showed the US economy shrinking for the first time since 2022, while factory activity in China slipped into the worst contraction since December 2023.
11:16 AM BST
Britons hoard cash and slash borrowing after Trump tariff shock
Families are holding back spending and stashing their cash, amid higher taxes and fears of a global economic slump emanating from Donald Trump’s tariff shock.
Credit card borrowing slowed sharply in March, Bank of England figures show. Households borrowed £238m on the plastic over the month, down from almost £700m in February and more than £900m in January.
At the same time they put an extra £7.4bn into bank and building society accounts, more than half of which went into ISAs ahead of the annual deadline.
That is up from the £5bn saved in February, though not as high as January’s £9.5bn.
Ashley Webb at Capital Economics said the numbers “suggest households were starting to spend more cautiously even before the full hit to consumer confidence from the heightened uncertainty caused by the new US tariffs regime is felt”.
It raises the possibility of a weaker economy and slower economic growth as a result, if consumers cut back spending.
“Today’s data release suggests households started to tighten their purse strings amid the weakening economic outlook,” Mr Webb said.
“If the recent drop in consumer confidence is sustained, consumer spending may be a bit softer than we expect this year.”
10:59 AM BST
Wall Street poised for rally despite tariff uncertainty
US stock markets are on track for gains at the opening bell as results from Microsoft and Facebook-owner Meta outweighed tariff concerns.
Meta rose 6.2pc and Microsoft jumped 8.2pc in premarket trading after the members of the so-called Magnificent Seven group of Wall Street companies revealed better than expected performances during the first three months of the year.
Amazon and Apple are scheduled to report after the close today, although the iPhone maker was down 1.3pc before the bell after a federal judge ruled it had violated a US court order to reform its App Store.
Wall Street had already brushed off figures on Wednesday showing the US economy contracted during the first quarter as Donald Trump’s tariff war triggered a surge in imports.
Estimates for S&P 500 earnings growth in the first quarter now stand at 11.5pc, according to LSEG, up from the 7.8pc growth forecast at the start of April.
In premarket trading, the Dow Jones Industrial Average was up 0.8pc, the S&P 500 gained 1.3pc and the Nasdaq 100 rose 1.8pc.
10:41 AM BST
Factory orders slump amid ‘most severe slowdown in years’
Factory orders plummeted after Donald Trump’s trade war slashed demand for British-made goods.
Export orders dropped at a pace not seen since the first Covid lockdown, according to an influential survey of manufacturers.
Overall activity in British industry dropped for the seventh consecutive month, S&P’s purchasing managers’ index showed, with factories cutting back employment as Rachel Reeves’s £25bn National Insurance raid came into force.
Tax increases were in part responsible for manufacturers’ cost pressures rising at their fastest pace since late 2022.
Fhaheen Khan, economist at industry group Make UK, said Mr Trump’s tariffs – which include a 10pc levy on all goods sent from the UK to America, rising to 25pc on steel, aluminium and cars – “has left manufacturing experiencing its most severe slowdown in years”.
“The unpredictability, particularly around US tariff policy, is doing significant damage and paralysing decision makers,” he said.
“Many firms are delaying major investment decisions until greater clarity emerges, whilst being forced in the meantime to cut costs through redundancies while pushing through price increases.”
10:28 AM BST
Barclays predicts four consecutive interest rate cuts
Barclays has also predicted the Bank of England will begin a campaign of consecutive interest rate cuts next week.
The FTSE 100 bank thinks members of the Monetary Policy Committee (MPC) will reduce borrowing costs at each of the next four meetings, taking the Bank Rate from 4.5pc to 3.5pc.
UK chief economist Jack Meaning said the Bank would likely revise down its inflation forecast due to the impact of tariffs.
He said: “We expect the MPC to be much clearer that the impact of tariffs will be disinflationary.”
Traders on money markets have priced in a cut at the next meeting of the MPC, with another two cuts expected by September and a 90pc chance of a fourth before the end of 2025.
09:53 AM BST
Factory bosses most pessimistic in two years
British manufacturers were their most pessimistic in more than two years after Donald Trump unleashed his “liberation day” tariffs, a closely watched survey showed.
The S&P Global UK Manufacturing PMI showed factory output slumped for a seventh month in a row during April as trade uncertainty “drained confidence from both consumer and business-to-business clients”.
Employment in the sector declined for a sixth straight month, with the rate of job losses hitting its second-sharpest pace in almost five years.
Rob Dobson, director at S&P Global, said: “New export business fell at the quickest pace for nearly five years, with demand from clients in the US, Europe and mainland China all declining.
“Surveyed manufacturers noted that US tariff announcements were having a noticeable impact on global markets as trading partners adapt to increased trade volatility.
“Manufacturers are also seeing an increasingly harsh cost environment, with purchase price inflation hitting a 28-month high.
“Alongside general raw material price increases on global markets, UK producers are also facing domestic inflationary pressure from increases to National Insurance, minimum wages and the knock-on impact of the latter on higher pay grades.
“These increased costs are resulting in a combination of higher selling prices and cutbacks to non-essential spending on staffing and purchasing, potentially reinforcing the ‘rising costs, declining demand’ backdrop.”
09:44 AM BST
Airbus chief tells US airlines he won’t help fund tariffs on jets
Airbus warned its US airline customers that they must fund tariffs on imported aircraft themselves, ruling out the possibility of helping to absorb the additional costs.
Guillaume Faury, the planemaker’s boss, said it is “in dialogue with customers on the different options,” but that slashing prices to offset the impact of the tariffs is not one of them.
He said: “We will not pay tariffs when it comes to planes going to US customers from outside of the US. It’s their duty to do this.
“They are not, obviously, very happy to see that situation and we are sitting down with them to find ways to deal with it, at least in the short term. In the mid term and long term that’s a more difficult question.”
Airbus’s tough stance, backed up by a record order book that means it should have little difficulty in finding alternative takers for unwanted planes, contrasts with that of some other European firms for which the US is a major market. Aston Martin said this week that it would not pass on the “full effect” of the tariffs while stopping short of absorbing the whole cost.
The approach means that US carriers, which have stated that they won’t pay tariffs, are likely to defer deliveries from the European company if there is no shift from Donald Trump on the levies.
It is possible that airlines might be able to circumvent tariffs by bringing planes into service outside the US, though a Delta Air Lines plan to route a new A350 jet from Airbus’s manufacturing base in Toulouse, France, via Tokyo revealed on flight-tracking websites later showed as cancelled.
Mr Faury said the US should stand by a 1979 agreement according to which the airliner sector is exempt from tariffs.
That accord, he said, had encouraged the integration of manufacturing industries on either side of the Atlantic, to a degree that plane assemblies and systems may cross back and forth several times, potentially attracting tariffs on each occasion should the Trump measures go ahead.
Mr Faury acknowledged that the President had handed Airbus an advantage in selling its planes in China after Beijing responded to the tariffs by blocking the importation of jets produced by its arch-rival Boeing.
“The decisions taken by China are obviously good news for us,” he said.
09:37 AM BST
Bank of England to make back-to-back rate cuts, says Wall Street giant
The Bank of England will announce a series of back-to-back interest rate cuts as Donald Trump’s tariff war threatens to hammer growth in Britain’s economy, a major Wall Street bank has said.
Morgan Stanley predicted policymakers will announce an interest rate cut next week from 4.5pc to 4.25pc “in anticipation of a possible large-scale global growth hit”.
It said this would be followed by back-to-back cuts through to November, taking interest rates down to 3.25pc, before eventually falling to 2.75pc during the first half of 2026.
However “more adverse global growth scenarios” could force the Bank to cuts rates closer to 2pc.
Analyst Bruna Skarica said she expects the terms “gradual and careful” to be removed from the Bank of England’s guidance on interest rates “to leave itself space to accelerate cuts if needed”.
She said there were “quite elevated” chances of bigger half a percentage point rate cuts in June or August “barring a swift resolution of trade tension between the US and its largest trading partners”.
09:10 AM BST
Lloyds sets aside extra £100m to cover unpaid loans amid Trump tariff war
Lloyds Banking Group has set aside an extra £100m to cover the costs of customers failing to repay loans due to Donald Trump’s tariffs.
The British bank said it has increased its buffer to cover potential loan losses to £309m, compared to just £160m at the end of the final quarter of 2024.
However, the lender said it is yet to see any real impacts of Trump’s tariffs on its business as it said its loan book remained “resilient” in the first three months of this year.
Lloyds added that wage growth and higher house prices had partially offset the negative impacts of the US tariffs on its loans book.
The lender, which is viewed as a bellwether for Britain’s economy, also posted a 7pc drop in its first quarter profits, to £1.5bn, as higher costs impacted its bottom line.
Shares fell as much as 2.6pc as Lloyds said higher wage bills and a decision to frontload severance costs linked to laying off staff had eaten into profits in the first quarter.
The bank, which is Britain’s largest retail lender, is cutting around 500 staff as part of the £4bn transformation plan it first launched in 2022.
Its income was boosted by an increase in revenue from its UK motor finance business, which is currently involved in an ongoing case at Britain’s Supreme Court.
Lloyds previously set aside £1.2bn in February to cover the costs of a possible barrage of lawsuits from drivers who say they were missold car loans.
The Supreme Court is expected to publish a decision in July on whether it was unlawful for lenders to pay secret commissions to car salesmen who sold customers motor finance loans.
09:00 AM BST
Persimmon expects to avoid impact from tariffs
Housebuilder Persimmon said it expected to avoid any effects from Donald Trump’s tariff campaign as it maintained its sales targets.
The FTSE 100 developer said it remained on track to deliver between 11,000 and 11,500 completions over the course of the full year, “providing the UK housing market remains stable”.
It has no direct trade with the US and said any indirect impact from tariffs would be “limited”.
Chief executive Dean Finch said: “We have seen no immediate impact on the business or on customer confidence from the recent geopolitical uncertainty.”
Shares rose 0.8pc as it said forward sales increased by 17pc to £1.7bn with its private average selling price up 4pc to around £293,300.
08:38 AM BST
Rolls-Royce outlines plan to ‘offset’ tariff uncertainty
Rolls-Royce hailed a “strong start” to the year despite growing uncertainty due to tariff increases and continued supply chain issues.
Shares in the British engineering giant rose 2.9pc as it stressed it expects to “offset” the impact of announced tariffs and is taking mitigating actions.
Boss Tufan Erginbilgic said the company, which specialises in making aircraft engines, is also closely monitoring the potential impact of inflation and a wider economic slowdown on demand for its products.
It comes a month after Donald Trump announced his “liberation day” tariffs, which he subsequently paused for 90 days on all countries except China.
Rolls-Royce held its profit and cash flow guidance for the rest of the year despite “the uncertainties associated with tariffs and continued supply chain challenges”.
Rolls-Royce has been undergoing a major turnaround plan under chief executive Mr Erginbilgic which included cutting 2,500 jobs.
He said the business is making “good progress on our transformation” and is confident of meeting its financial guidance for the year.
It is on track to deliver between £2.7bn and £2.9bn of underlying operating profit for 2025.
08:25 AM BST
FTSE 100 edges down at the open
The FTSE 100 opened lower as a number of companies reported concerns about the impact of tariffs.
The UK’s flagship stock index began the day down 0.3pc but was last trading flat at 8,496.12.
The FTSE 100 closed higher for a 13th consecutive day on Wednesday, extending its longest winning streak in nearly nine years.
However, it was dragged down in early trading by oil heavyweights Shell and BP, as oil prices edged down further towards $60 a barrel.
The mid-cap FTSE 250 was up 0.2pc.
08:24 AM BST
US has ‘reached out’ to China for talks on tariffs
Donald Trump’s administration has reached out for talks with China about the tariff war between the world’s two largest economies, according to reports linked to Chinese state media.
Yuyuan Tantian, a social media account affiliated with Chinese state broadcaster CCTV, said the US has “proactively reached out to China through multiple channels”.
In a post published on its official Weibo social media account, it said America was “hoping to hold discussions on the tariff issue”.
President Trump has said several times that he is in talks with Beijing about the tariff war between the two nations, which has seen the US impose 145pc duties and China hit back with levies of 125pc on American imports.
Trump said on Wednesday he believed there was a “very good chance” his administration could do a deal with China.
Beijing last week repeatedly denied such talks were taking place, accusing Washington of “misleading the public”.
Guo Jiakun, a spokesperson for China’s foreign ministry, said on Wednesday that “as far as I know, there have been no consultations or negotiations between China and the US on tariffs”.
08:20 AM BST
Good morning
Thanks for joining me. The US has reached out to China for talks on tariffs, reports linked to Beijing’s state media have said, as President Trump hailed a “good chance” of a deal between the two countries.
Yuyuan Tantian, a social media account affiliated with Chinese state broadcaster CCTV, said the US has “proactively reached out to China through multiple channels”.
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What happened overnight
Asian shares advanced, with many markets in the region closed for Labor Day holidays, after US stocks stormed back from steep early losses to a seventh straight day of gains.
Uncertainty about what President Donald Trump’s trade war will do to the US economy remains a key focus for investors.
Japan’s benchmark Nikkei 225 rose 1.1pc in afternoon trading to 36,447.26. Earlier in the day, the Bank of Japan decided to keep its benchmark interest rate unchanged as worries mount over the impact of Trump’s policies.
Australia’s S&P/ASX 200 edged up 0.2pc to 8,145.60.
On Wednesday, the S&P 500 rose 0.1pc to extend its winning streak to a seventh day, closing at 5,569.06.
The Dow Jones Industrial Average added 0.3pc to 40,669.36. The Nasdaq Composite edged down by 0.1pc to 17,446.34.