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Donald Trump has lashed out at China after Beijing announced it would retaliate against his “liberation day” tariffs.
The US president said China had “panicked” and “played it wrong” by announcing 34pc levies against all American goods from next Thursday.
His comments came as Wall Street stocks plunged sharply again, with the benchmark S&P 500 on track for its worst week since the first Covid lockdown in March 2020.
The Nasdaq Composite was down more than 20pc from its record highs set in December, entering what investors call a “bear market”.
Leah Fahy of Capital Economics said China had made “an aggressive, escalatory response that makes a near-term deal to end the trade war between the two superpowers highly unlikely”.
The FTSE 100 in London fell 5pc in its biggest decline since the onset of the pandemic five years ago.
In a note to clients entitled “There will be blood”, Wall Street giant JP Morgan raised the odds on a global recession this year from 40pc to 60pc.
On Friday afternoon, Donald Trump criticised the chairman of the US Federal Reserve as he publicly lobbied for an interest rate cut.
He claimed Jerome Powell was always “late” in cutting rates and accused the Fed chairman of “playing politics”.
Mr Powell did not directly respond to the remarks but, in a speech in Virginia, said that the Fed was obliged to act against the risk of an “ongoing inflation problem”.
He said: “While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.”
It came as Mr Trump claimed Sir Keir Starmer was “very happy” with the treatment given to Britain by the US over tariffs.
The US president hit Britain with 10pc tariffs as he unveiled his “liberation day” import taxes on countries around the world. The levies against Britain were the joint lowest imposed on any nation.
Read the latest updates below.
11:04 PM BST
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10:26 PM BST
JP Morgan forecasts US recession
The US economy will contract by 0.3pc across the year as Donald Trump’s trade tariffs push America into recession, according to one of Wall Street’s biggest investment banks.
JPMorgan slashed its forecasts for US GDP this year from 1.3pc growth across the full year to a 0.3pc fall as the global trade war ramped up on Friday.
The bank’s chief US economist Michael Feroli said in a client note: “We now expect real GDP to contract under the weight of the tariffs, and for the full year (4Q/4Q) we now look for real GDP growth of -0.3pc, down from 1.3pc previously.
“The recession in economic activity is projected to push the unemployment rate up to 5.3pc.” This will be a surge from the current rate of 4.2pc.
The worst of the blow to will hit in the middle of the year, with US GDP contracting in Q3 and Q4, Mr Feroli said.
The forecast reflects the fact that higher trade tariffs will drive up inflation, hitting real incomes and consumer spending.
Mr Feroli said: “The pinch from higher prices that we expect in coming months may hit harder than in the post-pandemic inflation spike, as nominal income growth has been moderating recently, as opposed to accelerating in the earlier episode.”
Heightened uncertainty also means that consumers will be less willing to use their savings to spend, he added.
09:51 PM BST
Canadian stocks slump
Canadian share prices plunged at the fastest pace in nearly five years on Friday as the trade war fallout deepens.
The S&P/TSX Composite Index recorded its largest single-day loss since March 2020 on Friday, dropping by 4.7pc.
This means Canada’s benchmark index is now down by a tenth since its January peak.
09:37 PM BST
Worst week for US stocks since March 2020
American share prices have had their worst week since the start of the Covid pandemic.
The S&P 500 slumped by 6pc on Friday after a 4.8pc drop on Thursday, meaning it has shed $5.4 trillion in two days.
Across the week, the index plunged by 9.1pc, its biggest fall since the onset of lockdown in March 2020.
The Nasdaq 100 also slumped by 5.6pc today and was down by 20pc since February.
Luca Paolini, chief strategist at Pictet Asset Management, told Bloomberg: “The market is bleeding and more pain is clearly coming as this escalating trade war risks pushing the US economy into a recession.”
09:24 PM BST
Oil slumps to four-year low
Oil prices have plunged to their lowest level since the pandemic as investors bet Donald Trump’s tariffs will hit global growth.
The price of West Texas intermediate futures have plunged by 14pc in two days to hit $61 per barrel while the cost of Brent crude has dropped to its lowest level since 2021.
Oil prices are falling because analysts are slashing their growth forecasts for countries around the world as they prepare to take the hit from the US President’s trade war.
The Saudi-led Organisation of Petroleum Exporting Countries (Opec) has also announced plans to increase production in May.
Mounting fears of lower demand meant copper prices fell by 7.7pc to their lowest level since January while European natural gas futures tumbled by as much as 10pc.
09:12 PM BST
Nike shares surge after Trump call with Vietnam
Nike’s share price soared on Friday after US President Donald Trump said he had a “very productive call” with the leader of Vietnam.
Sportswear brand Lululemon, footwear designer Skechers and furniture company Wayfair also got big share price boosts as investors bet on an improved outlook for companies with large manufacturing operations in Vietnam.
Mr Trump said that he wants to cut Vietnam’s “tariffs down to zero” after a call with the country’s president To Lam.
This would be a huge U-turn after the US President announced on Wednesday that he would hit Vietnam with “reciprocal” tariffs of 46pc.
This would be nearly five times the minimum 10pc charge he imposed on other nations - a hammer blow for companies who use factories in the manufacturing hub.
Nike’s share price rose to wipe out an earlier loss and gained nearly 6pc on signs that this scenario could be avoided.
Lululemon jumped by nearly 4pc, while Skechers and Wayfair both climbed more than 6pc.
08:45 PM BST
Trump says ‘only the weak will fail’
Donald Trump has added to his flurry of social media posts today by saying that “only the weak will fail”.
The apparent reference to his trade war comes on a brutal day for Wall Street, as investors dump stocks amid worries about the health of the US economy.
08:41 PM BST
Tariff war could lead to Trump impeachment, warns Trump ally
A leading Republican supporter of Donald Trump has hit out at the US president’s tariffs, saying that they could lead to a political “bloodbath” for his party.
Senator Ted Cruz said that “if the tariffs remain in place and we have retaliatory tariffs” it could plunge America into a serious recession and “2026 in all likelihood politically would be a bloodbath”, referring to the US midterm elections next year.
He said: “You would face a Democrat House, and you might even face a Democrat Senate”.
“Look, we’ve got a 53 to 47 majority in the Senate. But if we’re in the middle of a recession and people are hurting badly, they punish the party in power. And to be clear, if that happens ... the Democrat House that gets elected will immediately impeach Donald Trump, and we would spend the next two years of 2027 and 2028 with constant impeachment battles, constant investigations, constant political attacks, all of the weaponisation that we saw in the first term.”
08:29 PM BST
US stock markets plunge as trade war escalates
Wall Street slumped today as US stocks suffer their worst crisis since the pandemic.
The S&P 500 lost as much as 6pc in trading today, while the Nasdaq tumbled up to 5.9pc and the Dow Jones lost 5.4pc.
The plunge occurred after deepened after China matched Donald Trump’s big raise in tariffs. The move increases the stakes in a trade war that could end with a recession that hurts everyone.
Brian Jacobsen, chief economist at Annex Wealth Management, said: “For investors looking at their portfolios, it could have felt like an operation performed without anaesthesia.”
But Mr Jacobsen also said the next surprise for investors could be how quickly tariffs get negotiated down. “The speed of recovery will depend on how, and how quickly, officials negotiate,” he said.
It came on a day that the US president urged the Federal Reserve to cut interest rates.
Emily Bowersock Hill at Bowersock Capital Partners told Bloomberg: “While investors are hoping that the Fed comes to the rescue, it’s unclear how a few potential rate cuts this year will undo the economic damage that these tariffs are likely to cause.”
08:04 PM BST
Italian PM downplays impact of Trump’s tariffs
New US tariffs will “certainly have a significant impact” on Italy but the country should be able to handle them, Giorgia Meloni reportedly told her cabinet on Friday.
Ms Meloni - Italy’s hard-Right leader and ally of President Donald Trump - told her ministers that the effects of the new tariffs are on a scale “we can meet”, according to a government source.
She pointed to comments by Christine Lagarde, the head of the European Central Bank, who told the European Parliament early this week - before the US tariffs were unveiled - that Mr Trump’s trade war with the EU would likely shave a little off the eurozone’s economy.
Ms Lagarde estimated that a hypothetical 25pc tariff rate would cut eurozone GDP by 0.3pc in the first year.
In the end, Trump on Wednesday announced a 20pc rate on imports into the United States from European Union countries.
“Given that, the 20pc tariffs should lead to a cut to European GDP of less than the estimated 0.3pc. That would certainly have a significant impact, but of an order of magnitude we can meet,” Ms Meloni reportedly said.
She reportedly urged ministers not to panic and stressed it was “important not to unduly amplify the actual impact of the US decision”.
07:51 PM BST
Trump’s erratic trade war ‘good for TV ratings but not investment’
Donald Trump’s erratic decision-making is “probably is good for raising the ratings of a TV show” but bad for investment, Bill Clinton’s former treasury secretary has said.
Larry Summers said in an interview with Bloomberg Television: “All of us making decisions don’t want to make them when there are a whole bunch of cards that are going to be turned over before too long. How could anybody act with confidence when you don’t know what the price of steel is going to be, when you don’t know what the situation of your competitors is going to be?
“So the traditional approach of policymakers is to try to provide as predictable an environment as possible to as to increase business confidence. And this new approach of trying to maintain maximum flexibility probably is good for raising the ratings of a TV show, because you never know what’s going to happen next. But it’s hard to believe that it inspires the confidence that will be the basis for investment.”
07:22 PM BST
Klana axes floatation plans after Trump causes stock market plunge
Klarna has cancelled plans to start marketing its flotation next week on the New York Stock Exchange, the Wall Street Journal has reported.
The buy-now, pay-later lender has decided to postpone its plans after Wall Street plunged in response to Donald Trump’s trade war.
Klarna declined to comment.
07:17 PM BST
China limits rare earth exports in setback for US defence and tech giants
In addition to announcing 34pc tariffs on US imports, China has said it will impose export restrictions on so-called rare earth elements.
It is part of a sweeping response to Donald Trump’s tariffs, squeezing supply to the West of minerals used to make weapons, electronics and a range of consumer goods.
China produces around 90pc of the world’s rare earths, a group of 17 elements used across the defence, electric car, energy and electronics industries. The United States has only one rare earths mine and most of its supply comes from China.
Beijing announced the controls today as part of a broader package of tariffs and company restrictions in retaliation for Trump’s decision to hike tariffs against most Chinese products to 54pc.
The export curbs include not only mined minerals but permanent magnets and other finished products that will be difficult to replace, analysts said.
The move, which affects exports to all countries, not just the US, is the latest demonstration of China’s ability to weaponise its dominance over the mining and processing of the critical minerals.
Seven categories of medium and heavy rare earths, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium-related items, will be placed on an export control list as of April 4, according to the Ministry of Commerce.
Lockheed Martin, Tesla and Apple are among the US companies that use Chinese rare earths in their supply chains.
“China made that list strategically,” said Mel Sanderson, a director at American Rare Earths, which is building a Wyoming rare earths mine it hopes to open by 2029, and co-chair of the Critical Minerals Institute trade group. “They picked the things that are crucial for the US economy.”
While the export controls stop short of an outright ban, Beijing can throttle shipments by restricting the amount of export licences it issues.
07:02 PM BST
EU has ‘frank’ exchange with US over tariffs
European trade commissioner Maroš Šefčovič has said that the EU is “committed to meaningful negotiations” with the US but that it is also ready to “defend our interests”.
He said that he had a “frank” two-hour discussion with US treasury secretary Howard Lutnick and the US Trade Representative Jamieson Greer.
06:49 PM BST
Trump signs reprieve for TikTok
Donald Trump has decided on a further reprieve for TikTok, the Chinese social media platform at risk of a ban in the US.
In comments on his social media platform, he said negotiating a deal the platform to sell its US business will “require more work”.
He said: “We hope to continue working in good faith with China, who I understand are not very happy about our reciprocal tariffs.”
06:33 PM BST
Trump may add Fed war to trade war, warns economist
There is an increasing risk that Donald Trump will launch a war on the US central bank in the middle of his trade war, an economist has warned.
Professor Costas Milas of the University of Liverpool said: “Jerome Powell is in a very tricky place because the Fed currently faces the prospect of higher inflation and lower economic growth. One problem the Fed has is rising inflation expectations.
“In fact, next year’s inflation expectations in the US jumped up from 4.3pc in February to 5pc in March, well above the current inflation of 2.5pc.
“Rising inflation expectations will surely translate into higher inflation through, for instance, higher wage demands made by workers. This implies, and rightly so, that Jerome Powell and Fed’s policymakers will either delay interest rate cuts or - even worse - be forced to raise interest rates to reduce inflation in light of the inflationary impact of tariffs.
“Such an unwelcome scenario will not go down well with Trump who is already pressing the independent Fed for interest rate cuts. Here comes the problem: in the middle of Trump’s trade wars, there is an increasing risk of Trump starting a ‘domestic’ war with the Fed, which will destabilise financial markets and the economy further.”
06:28 PM BST
Starmer wants countries to win over Trump without ‘all-out trade war’
Sir Keir Starmer is conferring with other countries over Donald Trump’s tariffs in a race to get better access without a full-on trade war.
Downing Street said he spoke to Australian PM Anthony Albanese and Italian premier Giorgia Meloni today. In separate calls, the British leader said it had been “clear for a long time that like-minded countries must maintain strong relationships and dialogue to ensure our mutual security and maintain economic stability”, a Downing Street spokesperson said.
“They all agreed that an all-out trade war would be extremely damaging and is in nobody’s interests, while agreeing to keep in close contact in the coming days.”
06:20 PM BST
Warren Buffett says pro-Trump comments are fake
Fake comments by the billionaire investor Warren Buffett are circulating on social media, his investment group has said.
Berkshire Hathaway said: “There are reports currently circulating on social media (including Twitter, Facebook and TikTok) regarding comments allegedly made by Warren E. Buffett. All such reports are false.”
It comes on the day Donald Trump shared a social media post with a video that seemed to suggest that Mr Buffett was backing backing his trade war.
The video suggested that Mr Buffett had said that Trump “is making the best economic moves he’s seen in over 50 years”.
05:58 PM BST
European shares confirm official ‘correction’ in worst day since 2020
European shares slumped on Friday, with the pan-European Stoxx 600 and Germany’s Dax confirming they are in a market correction, meaning they have fallen 10pc from their high.
It came after China announced a slew of countermeasures against tariffs imposed by Donald Trump.
The Stoxx index closed 5.1pc lower, its biggest daily loss since the Covid-fuelled sell-off in 2020. The index has now fallen nearly 12pc from its March 3 all-time closing high, confirming it in correction territory. The index’s weekly loss of more than 8pc was also its worst in five years as investors shunned risk and sought safe-haven assets.
Germany’s Daxalso confirmed it is in a correction, dropping 5pc.
A gauge of eurozone stock market volatility rose 8.68 points to 34.2, its biggest one-day spike in over two years.
Benjamin Ford, a strategist at Macro Hive, said: “There’s only been a handful of times when risk aversion has gotten worse than it currently is.
“One was during the great financial crisis, the other was during Covid-19.”
05:54 PM BST
Trump personally selected ‘nonsense’ tariff formula
Donald Trump’s simplistic methodology for deciding his tariff rates has raised eyebrows from economists.
Steven Rattner, an adviser to the US Treasury secretary under the Obama administration, claimed Mr Trump’s mathematical formula used to decide tariff rates was “pure nonsense”.
According to a report in the Washington Post, officials developed a range of options for determining tariff levels.
But instead of opting for a complex model, Mr Trump personally chose the mathematical formula he used, the Washington Post has reported.
05:40 PM BST
US tech firms continue plunge
Some of the most weightiest fallers on Wall Street today are among big tech firms.
All of the so-called “magnificent seven” stocks have fallen, with Apple down 5.3pc, Tesla down 10pc, Microsoft down 2.4pc, Amazon down 2.5pc, Nvidia down 7.9pc, Meta down 4.6pc and Google owner Alphabet down 1.5pc.
PC manufacturers - reliant on China for much of their production - continued their slide today, with Dell losing 6.9pc and HP dropping 5pc.
The tech-heavy Nasdaq index is currently down 4.7pc, while the broader S&P 500 is down 4.5pc.
05:25 PM BST
France tells companies to show ‘patriotism’ in trade war
France’s economy minister has urged French companies to show “patriotism” after President Emmanuel Macron argued it would send the wrong message if they pressed ahead with investments in the United States.
Eric Lombard told French broadcaster BFM: “We are working on a package of responses that can go well beyond tariffs, in order, once again, to bring the US to the negotiating table and reach a fair agreement.”
He said the EU’s retaliation would not necessarily involve tit-for-tat tariffs and could use other tools, pointing to data exchange and taxes instead.
France and Germany have said the EU could respond by imposing a tax on US tech companies.
05:20 PM BST
Vietnam dispatches trade delegation to US
Vietnam is sending a trade delegation to the US this weekend, Bloomberg has reported, as its attempts to secure a reprieve from massive tariffs.
The Asian economy, which counts America as its biggest export market, faces a 46pc tariff under Donald Trump’s latest plans to upend global trade.
The country is reportedly sending its deputy PM, Ho Duc Phoc, to New York and Washington for talks.
It comes after a phone call between Mr Trump and a top Vietnamese Communist Party figure. Mr Trump said that Vietnam expressed a desire to cut their tariffs on US exports to zero.
05:10 PM BST
Wall Street ‘fear gauge’ highest since Covid
Wall Street’s “fear gauge”, the Vix, has surged to its highest level since Covid unleashed lockdowns around the world.
The Vix soared by 30pc today and is currently up 127pc since the start of the year after Donald Trump unleashed a trade war.
Chris Beauchamp, chief market analyst at online trading platform IG, said: “Sentiment is so fragile right now.
“Investors are firmly in the ‘get me to cash now’ phase, on fears that other nations will follow China’s lead, and of course that the US president will respond to China’s tariffs with even more charges.
“This trade war is like nothing we’ve seen for years, perhaps decades.”
European markets ended the day sharply lower, with London sinking around five percent. Frankfurt’s S&P 500 lost 4.7pc and France’s Cac 40 lost 4.3pc.
04:58 PM BST
Netanyahu has spoken to Trump about tariffs, officials say
Israeli prime minister Benjamin Netanyahu has spoken with Donald Trump about tariffs, Israeli sources say, as the Middle Eastern democracy seeks to minimise the impact of the threatened US measures.
As part of a sweeping new tariff policy announced by Mr Trump, Israeli goods exports to the United States face a 17pc tariff. The US is Israel’s closest ally and largest single trading partner.
An Israeli official said yesterday that Mr Trump’s latest tariff announcement could impact Israel’s exports of machinery and medical equipment.
Israel had already moved to cancel its remaining tariffs on US imports on Tuesday. The two countries signed a free trade agreement 40 years ago and around 98pc of goods from the US have been tax free.
04:54 PM BST
FTSE 100 suffers biggest one-day drop since the pandemic
The London Stock Exchange plunged further today, with the FTSE 100 closing after its biggest daily drop since the first lockdown in 2020.
The FTSE 100 closed down 5pc in a brutal day for London-listed shares. The domestically focused FTSE 250 closed down 4.4pc.
Only one company on the blue-chip FTSE 100 rose today, JD Sports, while four firms in the FTSE 250 increased.
The red ink also carried on US. The S&P 500 is down 4pc, while the tech heavy Nasdaq is down 3.9pc. The Dow Jones Industrial Average of 30 leading US companies id down 3.6pc.
04:50 PM BST
Trump’s tariffs wipe $4.9 trillion from global stock markets
Global stock markets have lost $4.9 trillion (£3.8 trillion) since Donald Trump’s “liberation day” speech on Wednesday, a stockbroker has calculated.
Dan Coatsworth, investment analyst at AJ Bell, said: “China’s retaliation to Trump’s latest round of tariffs means that both sides are not backing down. It caps off a horrible week for financial markets and dragged share prices even lower.
“We’ve now seen $4.9 trillion wiped off the value of the global stock market since the liberation day speech.
“The escalation in tariffs is bad for US companies who buy goods from China, and vice versa, because their costs will go up. It’s also bad for the world in general as we now have a repeat of the heightened geopolitical tensions between the US and China which dominated Trump’s first term in office.
“The rapid pull-back in stocks and shares over the past few days has put a dent in people’s investments, including those in the US who were meant to have benefited from Trump’s actions. Instead, his tactics have caused shockwaves in every corner of the world.
“Very little has come up trumps from liberation day and business leaders will be sitting with their head in their hands this weekend, wondering how to deal with the complex situation.
04:41 PM BST
Trump’s ‘questionable methodology’ has left room to negotiate
Donald Trump’s reliance on “questionable methodology” to determine the tariff rate for each country has left the door ajar for negotiation, an economist has said.
The president published a complex-looking algebraic formula to encapsulate “the sum of all cheating” which claimed to encompass “non-monetary barriers” such as currency manipulation.
It has since been revealed that the reciprocal rates were the sum of arbitrarily halving each country’s goods trade surplus with America relative to how much the territory sends the world’s biggest economy.
Emmanuel Cau of Barclays said the US tariffs had “turned out to be higher than anyone had imagined”, leaving the markets in a “state of shock”.
He said: “Given the questionable methodology used to determine the rate for each country, and their self-harming potential for the US economy, it is possible that there is room for negotiation.
“So the announced tariffs may be seen as a ceiling. But potential retaliation by targeted countries also increases the risk of further escalation.
“This does mean protracted uncertainty and heightened volatility for the foreseeable future, which will likely keep downward pressure on equities.”
Mr Cau said such downward pressure meant “recession risks have risen” around the world.
He added: “No one wins from a trade war, with the US economy set to be adversely impacted as much as, if not more, than Europe and the rest of the world.
“Both the dollar and the US equity markets have declined sharply after the tariff news, which is unusual - from America first to America last?”
04:41 PM BST
Powell says ‘not appropriate’ to respond to Trump comments
Jerome Powell, the US Fed chairman, has said he will not directly respond to any elected official’s comments.
It came after Donald Trump launched a social media attack accusing him of playing politics.
Mr Powell said the Fed, however, would be a source of “calm, rational analysis and also of stability.”
04:35 PM BST
Powell warns tariffs could inflict ‘persistent’ inflation
The Fed chairman Jerome Powell has said that it is too early to make decisions over interest rates following the imposition of Donald Trump’s tariffs.
While the inflationary pressures could be short lived, he said the “effects could be more persistent”.
In comments about tariffs, he said: “We have stressed that it will be very difficult to assess the likely economic effects of higher tariffs until there is greater certainty about the details, such as what will be tariffed, at what level and for what duration, and the extent of retaliation from our trading partners.
“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.
“The size and duration of these effects remain uncertain. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.
“Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices. Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.”
His remarks at a conference in Virginia came after Donald Trump publicly demanded rate cuts.
04:32 PM BST
Trump attacks Fed as he lobbies for interest rate cut
Donald Trump has attacked the chairman of the US Federal Reserve as he publicly lobbied for an interest rate cut.
He claimed the Fed chairman Jerome Powell was always “late” in cutting rates. “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!” he said.
04:25 PM BST
Americans forced to wait to pre-order Nintendo Switch 2
Nintendo has pulled plans to let Americans pre-order its latest games console as a result of Donald Trump’s tariffs.
The company said pre-ordering of the Switch 2 would be delayed “in order to assess the potential impact of tariffs and evolving market conditions”.
During the first Trump administration, the Japanese manufacturer said it would shift part of its Switch console production from China to Vietnam.
04:19 PM BST
Trump says talks with Vietnam may lead to trade deal
Donald Trump has suggested that he may do a trade deal with Vietnam, two days after he imposed a new 46pc tariff on the Asian manufacturing powerhouse.
He wrote on his Truth Social platform that “Vietnam wants to cut their tariffs down to zero if they are able to make an agreement with the US”.
Vietnam is a major manufacturing base for US companies including Nike and Hasbro.
The US previously signed a bilateral trade deal with Vietnam in 2000, which slashed tariffs between the countries.
It comes as Sir Keir Starmer scrambles to secure a trade deal with the US. Downing Street has said that it wants “to negotiate a sustainable trade deal, and of course to get tariffs lowered”.
04:09 PM BST
Trump’s tariffs will put 100,000 Britons out of a job, Deutsche Bank warns
Donald Trump’s tariffs could cost 100,000 jobs in the UK, an investment bank has warned.
Sanjay Raja, senior economist at Deutsche Bank, said that the tariffs would wipe off 0.3 to 0.6 percentage points from Britain’s gross domestic product.
“Based on our analysis, we estimate that the potential labour market hit could amount to something like a 0.2 ot 0.4 percentage point increase in the jobless rate... This would equate to a near 50,000 to 100,000 increase in jobs lost as a result of President Trump’s tariffs.
“This reflects the weaker demand environment, alongside the need for lower production due to higher global prices.
“What industries are likely to be hit? On our count, the biggest impacts are likely to be seen in machinery, autos, metals production as well as in services industries such as professional services and admin/support services to name a few.”
04:05 PM BST
Trump tariffs could help UK in fight against inflation
Donald Trump’s tariffs could end up helping Britain combat inflation, a Dutch banking giant has said.
James Smith, an economist at ING, said: “The fact that the Government hasn’t retaliated to the US tariff announcement thus far means the impact [on UK inflation] should be minimal. And if anything, it could prove deflationary further down the line as economic growth cools and the threat of dumping from other big global producers rises.”
Chinese producers, struggling to sell in the US, could be forced to cut prices in the UK to shift more stock.
He added: “We have long felt that the Bank will take rates down to 3.25pc in 2026. Markets are increasingly reaching this conclusion too.
He said the Bank of England will cut interest rates once a quarter for the rest of the year.
03:51 PM BST
Markets worried that Trump will overreact to China
Markets are worried that Donald Trump could respond badly to China’s decision to raise tariffs, an analyst has said.
Roman Ziruk, senior market analyst at financial services firm Ebury, said: “China’s response to fresh US tariffs, which includes a tit-for-tat 34pc levy on American imports among other measures, added to market concerns on Friday afternoon.
He added: “Investors are worried, and not only with the direct economic impact of these tariffs...
“The concern is that the move may lead to a potential further escalation of the trade war on the American side.”
Donald Trump has already accused China of panicking in response to his tariffs which, he wrote on social media was “THE ONE THING THEY CANNOT AFFORD TO DO!”
03:45 PM BST
Utility stocks rise as London Stock Exchange plunges
Water, electricity and commercial property companies are among the risers on the London Stock Exchange since Donald Trump unveiled new tariffs on Wednesday night.
Dan Coatsworth, at stockbroker AJ Bell, said: “It might feel as if everything is crashing on the market, yet there have been plenty of places to make money since Donald Trump’s liberation day speech turned the world on its head.
“Analysis by AJ Bell found 39 UK stocks in the FTSE 350 have delivered positive returns for investors over the past two days.
“There is a common theme that links nearly all of these names. It’s all about having defensive characteristics, such as providing an essential service that consumers or businesses need week in, week out.
The FTSE 350 - the largest 350 businesses on London’s stock market - is down 4.8pc today.
03:35 PM BST
US oil falls by $10 a barrel since tariffs announced
Donald Trump’s pre-election pitch to “drill, baby drill” was under threat as the price of US oil fell sharply.
US-produced West Texas Intermediate has declined by about 15pc since the President announced his global tariffs from more than $72 to about $62.
03:05 PM BST
Oil drops below $65 a barrel
Oil fell below $65 a barrel for the first time in four years amid fears that demand will be hit by the global trade war.
Brent crude has plunged as much as 8.5pc, which is its sharpest fall since August 2022, after China retaliated to Donald Trump’s “liberation day” tariffs.
Saxo Bank’s head of commodity strategy Ole Hansen said: “China’s aggressive countermove to US tariffs, announcing their own 34pc duties on US goods, with Europe likely to follow soon, all but confirms we are heading towards a global trade war — a war that has no winners, and which will hurt economic growth and, with that, demand for key commodities such as crude oil and refined products.”
03:00 PM BST
Nasdaq set to confirm bear market as tariffs trigger recession fears
Wall Street’s tech-heavy Nasdaq Composite index is set to confirm it is in a bear market today.
A bear market is confirmed when an index closes down at least 20pc from its most recent record high finish, according to a widely used definition.
The index is down around 3pc this afternoon, after China announced additional tariffs of 34pc on US goods in a serious escalation.
The Nasdaq Composite index is down this afternoon about 20pc from its Dec 16 record closing high of 20,173.89.
02:37 PM BST
Trump: China ‘panicked’ with retaliatory tariffs
Donald Trump said China had “panicked” by announcing 34pc retaliatory tariffs against the US.
The President said Beijing had done the “one thing they cannot afford to do” ahead of the new levies due to come into force on Thursday.
02:32 PM BST
Wall Street plunges as China escalates Trump trade war
US stock markets fell sharply at the opening bell after China announced retaliatory tariffs to Donald Trump’s “liberation day” import taxes.
The Dow Jones Industrial Average fell 2.4pc to 39,562.23 a day after it plunged 4pc in the wake of the US president’s imposition of tariffs around the world.
The S&P sank 2.5pc to 5,264.52 following a 4.8pc drop on Thursday, while the tech-heavy Nasdaq Composite sank 2.8pc to 16,65.73.
The tech-heavy index had fallen 6pc a day earlier.
02:17 PM BST
Market is ‘pricing in global recession’
The financial markets are pricing in a “global recession” set in motion by Donald Trump’s sweeping tariffs, an analyst has warned.
George Saravelos of Deutsche Bank said confidence-stricken markets were looking to central banks for support.
The FTSE 100, Dax in Germany and Cac 40 in Paris have all fallen more than 3pc today, with US markets on track to all fall more than 2pc at the opening bell in New York.
Mr Saravelos said: “The market is doing one thing: pricing in a global recession. What is the circuit breaker here? Central banks can help.”
Mr Saravelos said the ECB had shown appetite to step in given the disinflationary pressure from a faltering currency exchange with the dollar, while the Fed is expected to be more constrained as it stares down the barrel of a spike in inflation.
He added: “This is a US-centric fiscal shock driven by the Trump administration and it is fiscal policy that can unwind it.
“The countries that respond the quickest and most forcefully to this shock are those whose currencies will likely be the most resilient.
“And, on the flipside, the more the US fiscal strategy under the Trump administration lacks visibility, the more the market will punish the dollar and US assets.”
02:12 PM BST
Companies race to avoid losses from tariffs
Companies have been quickly hiring lawyers to help them walk away from deals that tariffs make unprofitable.
Ben Knowles, a partner at law firm Clyde and Co, said: “In response to tariffs, companies are already seeking to renegotiate and, more significantly, terminate commercial contracts that are no longer financially viable.
“Even in countries which are not as hard hit by tariffs, there will be a rise in commercial disputes, especially for sectors and companies operating across different markets.”
02:03 PM BST
US jobs surge despite tariff recession fears
US jobs surged by far more than expected in March, despite mounting warnings of a tariff-induced recession.
The American economy added 228,000 non-farm jobs last month, far more than the 140,000 economists had forecast and well above the average monthly gain of 158,000 over the last year, US government data shows.
The number of people employed in the federal workforce fell by just 4,000, following a 10,000 drop in the previous month, in a signal that Elon Musk’s Department of Government Efficiency (Doge) cuts are having much less impact than thought.
Jobs growth was driven by healthcare and transportation services.
However, the unemployment rate ticked up from 4.1pc to 4.2pc. There were also downward revisions to the jobs numbers for January and February, which the Bureau of Labor Statistics were down by a combined 48,000 compared to its previous estimates.
01:53 PM BST
Trump says policies ‘will never change’ as stocks plummet
Donald Trump said the sharp drop in global stock markets made it a “great time to get rich, richer than ever before” as he indicated he will not blink in his trade war.
The President said his policies “will never change” after China announced it would impose 34pc tariffs on the US response.
Mr Trump announced a new 34pc tariff on Chinese goods on Wednesday, which was added to levies already imposed on the world’s second largest economy, leaving it facing total tariffs of 54pc.
The US president’s comments come as Wall Street stock markets were on track to open about 3pc lower, with European and Asian markets nursing their heaviest losses in years.
01:48 PM BST
China tariffs make end to trade war ‘highly unlikely’
China’s retaliation to US tariffs makes a near-term deal to end the global trade war “highly unlikely”, economists have warned.
Capital Economics said the 34pc levies announced by Beijing on all US goods were “the most sweeping it has ever imposed”.
Another 11 US companies have also been added to China’s unreliable entities list and export controls have been expanded.
China economist Leah Fahy warned that Xi Jinping “appears to feel that China’s economy is strong enough to withstand whatever Trump throws at it next”.
She said that Xi “may be feeling that any agreement with Trump wouldn’t necessarily last or possibly that he’ll be in a stronger position relative to Trump to strike a deal in a couple of years’ time”.
She said: “This is an aggressive, escalatory response that makes a near-term deal to end the trade war between the two superpowers highly unlikely.”
She added: “And the tariffs may turn out not to be the whole story.
“Whereas the impact of US tariffs on China will hinge on how price sensitive firms and households are, in China’s state-dominated economy firms can be simply instructed to stop buying.”
01:35 PM BST
US employment surges ahead of tariffs
The US added more jobs than expected last month, official figures show, clouding economic picture for the Federal Reserve.
Nonfarm payrolls rose by 228,000 in March, according to the Labor Department, which was far more than the 140,000 expected by analysts.
However, the previous month’s figure was downwardly revised to 117,000.
Unemployment edged up from 4.1pc to 4.2pc.
Traders have been ramping up bets on the Fed cutting interest rates in the face of Donald Trump’s tariff war but high employment could mean such a move would risk stoking inflation in the world’s largest economy.
01:29 PM BST
Pound falls as China ramps up trade war
The pound fell as China deepened Donald Trump’s global trade war with retaliatory tariffs.
Sterling was down 0.7pc against the dollar to just over $1.30 as Beijing said it would impose 34pc tariffs on all US goods.
It comes as money markets price in three rate cuts by the Bank of England amid doubts about the health of the world economy.
Roman Ziruk, an analyst at Ebury, said: “Whether China’s announcements today will lead to more action from Trump’s administration remains to be seen, with a few days left until both the US and China’s tariffs are set to kick off.”
Meanwhile, the pound dropped 0.8pc to an eight-month low against the euro, which was worth 84.9p.
Chris Turner of ING said: “The euro has better liquidity than sterling and will benefit more as investors leave the dollar.”
Sterling dropped 1.6pc against the yen to a fresh five-week low at 187.92.
01:17 PM BST
Starmer to rush through watered-down electric car rules in wake of Trump tariffs
Sir Keir Starmer is preparing to rush through changes that water down electric vehicle (EV) targets as carmakers brace for Donald Trump’s tariffs.
Whitehall sources confirmed today that the zero emission vehicle (ZEV) mandate would be amended as soon as next week.
The new rules, first reported by The Times, will give manufacturers extra “flexibilities” following the imposition of 25pc duties on all the cars they export to the US.
01:01 PM BST
Reeves: We are doing everything in our power to get good deal from US
Rachel Reeves refused to be drawn on when an economic deal between the UK and US could be agreed.
The Chancellor said that she was “not going to give a running commentary” on when an agreement to mitigate the impact of Donald Trump’s 10pc tariff on British goods could be sealed but said “those conversations are ongoing”.
Ms Reeves told broadcasters that the Government was doing “everything in our power to get the best possible deal”.
12:54 PM BST
Copper prices plunge amid recession fears
The price of traded copper has fallen at the fastest pace in nearly three years amid concerns that world economy is heading for a recession.
The metal – which is a vital component for energy storage, electric vehicles, solar panels and wind turbines – tumbled more than 5pc in the steepest drop since July 2022.
David Oxley, commodities economist at Capital Economics, said: “All told, while commodities were not the focus of President Trump’s liberation day salvo, they could still be affected depending on how countries negotiate and retaliate, and the broader impact on global GDP growth.
He added: “The downside risks to global activity and trade fit with our already-bearish forecasts for most commodity prices over the coming years.”
12:35 PM BST
Keep tariffs and defence ‘separate’, urges Nato chief
The Nato secretary general has urged countries to keep the turmoil over US tariffs and commitments to defence “separate” amid the escalating global trade war.
Mark Rutte sought to calm tensions as Europe plots its response to Donald Trump’s sweeping duties.
He acknowledged that Article 2 of the Nato treaty stipulates that members will seek to eliminate conflict in their international economic policies and encourage economic collaboration.
Asked if tariffs could violate the treaty, he said: “Even then we have seen in the past that you will have discussions between members of the alliance on other issues than defence which will not immediately impact the capability and the ability of allies to deliver on the common defence and security.
“I think these two are really separate, we should keep them separate and should not get them to interfere in our discussions.”
Mr Rutte reiterated that the transatlantic relationship remained a “cornerstone of European security” and of “global stability”, but said an opportunity had arisen for Nato and the EU to “strengthen” their cooperation.
He added: “When it comes to Article 2, I don’t think this is in breach of Article 2. We have seen in the past many examples of differences of view, fights over tariffs, this has happened before without being in violation of Article 2.”
12:25 PM BST
PM to hold calls with world leaders amid tariff crisis
Sir Keir Starmer will speak to other leaders over the weekend on the shifting “global economic landscape”, Downing Street said.
The Prime Minister’s official spokesman repeated the Government’s line that it will remain cool-headed in its response to US tariffs.
The spokesman said: “We are very much aware that the global economic landscape is shifting, it means we have a responsibility to work even more closely with other countries to maintain stability and strengthen our partnerships abroad and you’ll see the Prime Minister engaging with international leaders over the weekend on this.”
12:21 PM BST
Banks hit as traders bet US to cut rates at least four times this year
Banks were the hardest hit stocks on the FTSE 100 as traders ramp up bets on interest cuts by global central banks.
Barclays fell as much as 11.3pc to make it the worst performer on the index, with NatWest down 10pc, Lloyds Banking Group dropping 8.1pc and HSBC declining as much as 8.4pc.
Across the FTSE 100 and FTSE 250, banks fell as much as 8.9pc.
It comes as traders priced in three cuts by the Bank of England this year with a 28pc chance of a fourth.
Derivatives markets indicate the US Federal Reserve will reduce borrowing costs four times this year, with a 64pc chance of a fifth cut.
12:09 PM BST
Oil plunges to four-year low
Oil prices have fallen to their lowest prices in more than four years after China’s retaliation to US tariffs raised fears of a global recession.
Brent North Sea crude, the international benchmark, fell more than 6pc below $66 per barrel, its lowest level since 2021.
US contract WTI dropped more than 6pc towards $62 a barrel, also a four-year low.
12:02 PM BST
German stocks fall at fastest pace since first Covid lockdowns
European stock markets have tanked after China announced its retaliation to Donald Trump’s tariffs.
Frankfurt’s Dax index of blue-chip companies fell at the fastest pace since Covid lockdowns began in March 2020, dropping as much as 5.2pc.
The Cac 40 in Paris shed as much as 4.2pc, which was its biggest decline since the early days of the Ukraine war in 2022.
The FTSE 100 was last down 3.9pc.
11:56 AM BST
Tariff shock will ‘reverberate around markets for longer’
Donald Trump’s tariffs will continue to cripple market confidence as governments around the world retaliate to the taxes, analysts have warned.
Barnaby Martin at Bank of America said the “single biggest reordering of global trade in modern times” would continue to pummell euro credit markets as countries plot their response to US tariffs.
He said: “Such a shock to the system will likely reverberate through markets for longer, we think.
“With so many permutations of “what’s next?” - retaliation or negotiation? US or rest of the world slowdown? Fed cuts or higher-for-longer rates?
“We think the most likely reaction by markets is to simply price-in higher risk premia in the near term.”
Mr Martin also said there has been “ominous price action” in the sell off of gold, bank stocks suffering and US stocks underperforming China and European stocks.
11:47 AM BST
Wall Street expected to plunge at the opening bell
US stock markets were on track to continue their heavy decline after China retaliated to Donald Trump’s liberation day with fresh tariffs on American goods.
The Dow Jones Industrial Average, S&P 500 and Nasdaq were all on course to plunge more than 2pc at the start of trading.
China’s finance ministry said it will impose additional tariffs of 34pc on all US goods from April 10 as a countermeasure to the tariffs imposed by Donald Trump on Wednesday.
The benchmark S&P 500 dropped 4.8pc on Thursday, its largest one-day percentage decline since June 2020, after Trump imposed a 10pc tariff on most imports into the United States and much higher levies on dozens of other countries.
The index closed at 5,396.52 points, a more than seven-month low.
The tech-heavy Nasdaq tumbled about 6pc on Thursday, its biggest one-day drop since the height of the pandemic-fuelled sell-off in March 2020.
The blue-chip Dow dropped 2.5pc in the prior session and the index looked on course to confirm a correction, or a 10pc drop from all-time highs.
Bank stocks in the United States dropped further on Friday, with the sector under pressure globally as investors anticipated more interest rate cuts from central banks and a hit to economic growth from tariffs.
Bank of America, JPMorgan Chase and Citigroup all fell around 2pc in premarket trading. The yield on the benchmark 10-year Treasury notes was down to a six-month low of 3.95pc.
11:31 AM BST
FTSE plummets as China announces retaliatory tariffs
The FTSE 100 fell at a drastic pace after China announced deepened the global trade war with retaliatory tariffs against Donald Trump’s America.
The UK’s flagship stock index has tanked to 8,160.40 following the news, taking its losses today to 3.7pc.
If it holds until the close, it would be the sharpest fall since the start of the Ukraine war in February 2022.
11:25 AM BST
China announces retaliatory tariffs against US
China has announced it will impose retaliatory tariffs on US imports after Donald Trump announced his “liberation day” levies.
Beijing said it would charge a 34pc tariff on all American goods entering the world’s second largest economy, starting from Thursday next week.
The levy is equal to the 34pc announced by the President on Wednesday, although the US added this to 20pc levies it had already imposed on China.
11:13 AM BST
UK hits back at claims Starmer ‘very happy’ with Trump tariffs
A Treasury minister appeared to deny claims by Donald Trump that Sir Keir Starmer was “very happy” with the Britain’s treatment after the President imposed tariffs around the world.
The US president imposed the joint lowest tariff of 10pc on Britain as part of his “liberation day” overhaul of world trade.
James Murray, the treasury minister, said the Government was “disappointed” with Mr Trump’s decision but would endeavour to keep calm amid the market turmoil.
He told BBC Radio 4’s Today programme: “We are disappointed in the fact that global tariffs have been introduced.
“We know it is clear that they will have an impact in the UK and around the world.”
Mr Murray said the Government reserved the right to retaliate but was focused on securing an economic deal that would avoid a fully-fledged trade war.
He said: “That is why our response to what was announced is to carry on with a cool head and our pragmatic approach to negotiate at pace to get an economic deal.”
Jonathan Reynolds, the trade secretary, told MPs on Thursday he would hold a four-week consultation on counter-measures.
An “indicative list” published by the Government showed products which could be targeted as part of retaliatory action, including bourbon whiskey, motorcycles, guitars and jeans.
11:06 AM BST
Irish premier urges EU to avoid ‘more damage’ in tariff war
Irish premier Micheal Martin has urged the EU to avoid causing “more damage” in a trade war with the US.
Taoiseach Mr Martin said it was important that the European bloc adopts a “strategic” approach to the issue of retaliatory tariffs on products imported from the US, to avoid further tariff hikes by the US administration on certain sectors where Ireland has a strong presence in the US market, such as spirits.
“We’ve engaged in significant advocacy in respect of making sure that the response is strategic,” Mr Martin told reporters outside Government Buildings in Dublin.
He added: “A number of countries, including ourselves, have made the point that we need to do this in a way that doesn’t invite more damage in an area where we have a surplus - and a three to one beneficial trading relationship in spirits and so forth.
“But then the more broader picture, I mean, other countries have been hit very hard in terms of the automotive industry.
“Obviously the (European) Commission and the President of the Commission (Ursula Ursula von der Leyen) has a difficult task in balancing the competing interests and the priorities of different member states.
“But, more importantly, I think the European Union will be doing this, I surmise, on a phased basis. One, (will be) negotiation. The European Union didn’t want any tariffs.
“The European Union will engage with the United States administration to negotiate a sensible landing zone here and resolution of this, because currently this will do a lot of damage to the world economy, to the American economy, to tax on people, to tax on businesses, and overall, it will damage investment.”
10:50 AM BST
Poll: Majority of US adults think tariffs will hurt average American
Just one in five people in the US believe Donald Trump’s decision to raise tariffs will help the average American, according to a new YouGov poll.
A representative survey of more than 3,600 US adults conducted on Thursday found 19pc believed the tariffs would help.
But a majority - 57pc - believed the decision would hurt the average American.
Some 20pc said they were not sure while 4pc said they believed there would be no effect.
Among Republican supporters, 39pc said raising tariffs would help, 29pc said they would hurt and 24pc said they were not sure.
The numbers illustrate the political gamble Mr Trump has taken. If the tariffs result in the average American feeling worse off the Republicans may well pay a price at the ballot box in upcoming elections.
Another YouGov poll showed how unpopular the US president has become across Europe:
10:34 AM BST
FTSE 100 plunges as banks hit by rate cut bets
UK stocks have slid further amid fears that retaliation to Donald Trump’s tariff onslaught could ignite a fully-fledged trade war.
The FTSE 100 was down as much as 1.7pc to 8,331.46, its worst decline since August last year, despite ministers insisting Britain was “negotiating intensively” and “at pace” to secure a deal with the US.
Banks across the FTSE 350 were down as much as 4.3pc, with HSBC tumbling as much as 5.9pc and Asia-focused Standard Chartered dropping as much as 4.9pc.
Tariffs have raised expectations that the Bank of England will cut interest rates to combat the expected downturn in the economy, with traders now pricing in policymakers will cut borrowing costs three times before the end of the year.
Energy companies listed on the FTSE 350 fell as far as 2.3pc, with BP dropping 2.9pc on the back of its chairman Helge Lund stepping down.
Mining and commodity stocks were also among the fallers in response to specific tariffs on metal production, such as aluminium.
Drugmaker Astrazeneca was down as much as 2.1pc on the assumption that Mr Trump’s tariff crosshairs would focus on pharmaceuticals next. The US president said tariffs on pharmaceuticals in the “very near future”.
Yuri Seliger at Bank of America said the tariff announcements had been “much higher than expected”, indicating room for manoeuvre.
He said: “The announced tariffs are more likely a starting point for negotiations. In fact, the executive order stated that tariffs could be lowered should trading partners ‘remedy non-reciprocal trade arrangements.’”
10:14 AM BST
Drugmaker shares drop as Trump vows tariffs ‘in near future’
Britain is facing a fresh economic blow after Donald Trump vowed to introduce drug tariffs “in the near future”.
The US president overnight said the White House was drawing up plans for new levies on pharmaceutical products. He said they would be “starting to come in, I think, at a level that you haven’t really seen before”.
Speaking to reporters on Air Force One, Mr Trump said: “That will be announced in the near future, and is under review right now.”
It came after pharmaceutical companies had appeared to be given a reprieve on Wednesday in the ‘Liberation Day’ tariffs, when drugs were listed among the items which would be given an exemption.
However, Mr Trump said on Thursday that pharmaceuticals would be a “separate category”. Other items on the exemption list would also see tariffs come in, Mr Trump said, including semiconductors.
He said: “The chips are starting very soon.”
It will be viewed as a further headache for the UK Government which is racing to secure a trade deal with the US and avoid any extra levies.
The UK exports around £8.8bn worth of medicinal and pharmaceutical products to the US annually. Two of its largest listed companies are major sellers into the US. GSK makes more than half of its sales in the US and AstraZeneca two fifths.
Shares in AstraZeneca were down 1.5pc, while GSK shares dropped 0.8pc as investors scrambled to understand what pharmaceutical tariffs could look like. In India, which is a major exporter of medicines to the US, shares slumped as much as 7pc.
Drug insiders told the Telegraph that they had yet to see anything concrete over the tariff plans, adding: “It’s clearly a fast-moving situation”.
10:04 AM BST
Construction firms’ pessimism hits 18-month high amid tariff threat
Construction activity in Britain’s economy fell for a third month in a row as pessimism surged over the threat of Donald Trump’s tariffs, a closely watched survey showed.
The S&P Global UK Construction PMI index showed business optimism plunged to its lowest level since October 2023.
Commercial construction contracted at the fastest pace since January 2021 as companies worried about Britain’s lacklustre economic prospects and the impact of rising geopolitical uncertainty, which hit clients’ investment spending.
Tim Moore, economics director at S&P Global, said: “Civil engineering experienced the biggest setback as activity decreased to the greatest extent since October 2020.
“Survey respondents commented on subdued sales pipelines and a subsequent lack of infrastructure work to replace completed projects.
“Commercial work also saw a headwind from delayed decision-making on major projects, largely due to worries about the impact of rising global economic uncertainty.”
09:51 AM BST
Cost of government borrowing drops at fastest pace since 2023
The cost of government borrowing has fallen at its fastest pace since 2023 as Donald Trump’s tariffs raised concerns about a global recession.
The 10-year gilt yield - a benchmark for the cost of servicing the nation’s debt - has dropped more than 12 basis points to 4.4pc today, which is its lowest level in five months.
Over the course of the week, the yield has dropped nearly 30 basis points, the most since December 2023, as traders sharply increased bets on the Bank of England cutting interest rates, predicing three more reductions this year.
The two-year yield, which is more sensitive to interest rate expectations, fell below 4pc for first time since before Rachel Reeves’s Budget in October.
Over the course of this week it has fallen at its fastest pace since August last year, when unexpectedly weak employment figures raised concerns the US Federal Reserve had left it too late to cut interest rates.
Kathleen Brooks, research director at XTB, said: “The two-year yield is lower by 10bps and has fallen by 29bps in the last five days, outperforming Treasuries, and most European bonds.
“The large move lower in bond yields has taken the edge off the euro and the pound at the end of the week, which are both sharply lower vs. the dollar, as the greenback stages a comeback.”
09:39 AM BST
Scrapping digital tax to ease US tariffs ‘like paying off a bully’
Agreeing to cut a tax on US tech firms in return for lifting Donald Trump’s tariffs would be like paying off a bully who could come back for more at a later date, Lord Darroch has suggested.
The former UK ambassador to the US, who served in the role during Mr Trump’s first term in the White House, cautioned against getting rid of the Digital Services Tax because of the message it could send.
There is rampant speculation the UK could offer to reduce or lift the tax on social media companies during talks with the US on an economic deal to remove or mitigate the impact of Mr Trump’s 10pc tariff on British goods.
Lord Darroch said the UK should “keep calm and carry on” with the negotiations but warned of the potential implications of granting big concessions.
He gave the example of US agriculture seeking more access to the UK market and said that would bring with it a risk of “massively” undercutting British producers.
Turning to the digital tax, he told LBC: “I also think it is difficult to agree to abolish the digital tax because you are essentially saying to someone who is bullying you, ‘I am going to pay you to stop’ and the risk there is they come back in six months time and say ‘we would like some more money now please’.
“I think that is a very difficult decision for the Government to take.”
09:24 AM BST
‘It takes Trump to deliver a true Brexit’
Britain escaped the worst of Donald Trump’s wrath on Wednesday night as he imposed a sweeping programme of new “reciprocal” taxes on imports from countries around the world, writes Rachel Avery.
Mr Trump has announced tariffs of 10pc on Britain as part of a “declaration of economic independence” by the US.
By contrast, China has been hit with tariffs of 34pc and imports from the European Union face a 20pc levy.
Uncertainty remains, however, over the potential impact of these tariffs on British consumers and businesses.
In an exclusive poll conducted by The Telegraph, 68pc of more than 21,000 voters said they did not think Mr Trump’s tariffs would be good for the UK.
Here is what you had to say:
09:10 AM BST
UK needs economic deal with US as soon as possible, says Stride
Ministers must agree an economic deal with the US to remove Donald Trump’s tariffs “as soon as possible” or the UK could be hit by rising unemployment and higher prices, Mel Stride warned.
The Tory shadow chancellor said it was a “vital, critical moment” for the UK and the Government must get a deal “over the line”.
Downing Street had hoped to secure a deal with the White House to avoid tariffs before they were introduced but those efforts fell short.
Talks on a carve-out deal to remove or mitigate the impact of the 10pc tariff on British goods remain ongoing but the Government has been unable to say when an agreement could be secured.
Mr Stride told Sky News: “We are seeing stock markets tumble around the world. We know that for our country and many others this could mean rising unemployment, higher prices for consumers, wages being hit, people’s livelihoods being destroyed.
“So this is a vital, critical moment for our country and I think it is really important now that the Government really engages and gets this deal over the line as soon as possible.”
08:56 AM BST
Gold slips from record high
Gold slipped from its record high as hit after Donald Trump unveiled his sweeping tariffs.
Bullion initially surged to a fresh all-time high of $3,167.84 an ounce on Thursday but has dropped 0.4pc today to about $3,095.
Gold has climbed about 40pc over the last year as it is considered a safe-haven from economic uncertainty.
Paul Williams, managing director of Solomon Global, said: “Gold’s soaring value is a stark barometer of global unease, reflecting deep economical and geopolitical tensions.
“With no relief in sight for the forces driving this surge, any significant near-term retreat seems unlikely.
“Even at record levels, gold demand remains robust because investors recognise the precious metal’s ongoing role as a hedge against inflation, geopolitical instability, and financial market volatility.”
08:50 AM BST
Minister: Fiscal rules ‘non-negotiable’ and won’t change despite Trump tariffs
Labour’s fiscal rules are “non-negotiable” and will not be changed because of the economic uncertainty caused by Donald Trump’s tariffs, a Treasury minister said.
James Murray said the Government would not reconsider its rules despite economists warning the tariffs could wipe out Rachel Reeves’s economic room for manoeuvre.
Labour has promised that day-to-day spending will be met by revenues and debt will be falling as a share of the economy within five years.
But there is growing speculation about whether those rules can be stuck to given the emerging economic landscape.
Asked if it was time to look again at the rules, Mr Murray told Sky News: “No. The fiscal rules are non-negotiable.
“This is a time to double down on and go even further and faster in terms of our Plan for Change and what it will deliver in terms of economic growth.”
08:41 AM BST
US recession risk ‘uncomfortably high’, warns top economist
The US economy has been put at an “uncomfortably high” risk of recession as a result of Donald Trump’s tariffs, a prominent economist has warned.
Mohamed El-Erian, the president of Queens’ College, Cambridge, and chief economic adviser at Allianz, said the “liberation day” import taxes could have a significant effect on the global economy.
“You’ve had a major repricing of growth prospects, with a recession in the US going up to 50pc probability, you’ve seen an increase in inflation expectations, up to 3.5pc,” he told CNBC at the Ambrosetti Forum in Cernobbio, Italy.
“I don’t think [a US recession] is inevitable because the structure of the economy is so strong, but the risk has become uncomfortably high.”
He also also warned that markets were underestimating the inflation impact of tariffs.
He said: “The first reaction has been concerns about growth. We haven’t had two other reactions yet: what will happen to growth in other countries, and that makes a question mark on whether the dollar weakness will continue, and then what does the [Federal Reserve] do?
“I think if we’re lucky we’ll get one rate cut, not four, and it wouldn’t surprise me if we get none.”
08:27 AM BST
FTSE 100 on track for worst week in nearly two years
The FTSE 100 was on track for its worst week since August 2023 as the sell-off in European markets deepened after Donald Trump imposed global tariffs.
The UK’s blue-chip stock index fell 0.8pc to 8,404.83 in early trading and was on course for a 2.8pc loss this week.
The pan-European Stoxx 600, which includes some British companies, fell 0.9pc, taking its losses for the week to 4.4pc, the sharpest weekly decline since June 2022.
The Cac 40 in Paris was down 0.8pc today and on track for a 4.8pc weekly loss, its worst since last June.
The Dax in Frankfurt dropped 0.6pc to take its weekly declines to 3.9pc, its worst since last August.
08:14 AM BST
Britain ‘negotiating intensively’ on trade deal, says Treasury minister
Britain is “negotiating intensively” and “at pace” to secure a deal with the US, a Treasury minister has said.
James Murray said the Government is was “engaging with businesses” when asked why the Government was consulting on possible retaliatory action to Donald Trump’s tariffs, given most economists say it would lead to a bigger hit to growth.
The Exchequer Secretary to the Treasury told Sky News: “We’ve been negotiating intensively to secure a deal since the Prime Minister went to Washington earlier this year and we’re continuing those negotiations at pace to secure a deal now.
“Obviously we’re engaging with businesses, we have been throughout this process.
“The next stage of engagement is to ask their input about what possible measures would look like in terms of the UK response, because we want to involve businesses in that decision, and we need to be clear that we keep all options on the table... we reserve the right to retaliate, but we want a deal, and our full focus is on that.”
08:04 AM BST
UK markets fall further amid recession fears
The FTSE 100 fell at the open amid growing concerns about the risk of a global recession as a result of Donald Trump’s tariffs.
The UK’s flagship stock index dropped 0.7pc to 8,418.71 while the mid-cap FTSE 250 declined 0.3pc to 19,153.88.
08:00 AM BST
Dollar near six-month lows amid ‘loss of confidence’
The pound edged lower against the dollar after hitting a six-month peak on Thursday, as the US currency stabilised slightly from its sharp sell-off.
Sterling was down 0.3pc to $1.306, having pushed as high as $1.3207 a day earlier, which was the highest since October.
The dollar slipped towards a six-month low against the euro as traders briefly priced in four interest rate cuts by the Fed over global recession fears.
Crucial US employment figures later could deepen the angst on global markets that have been rocked by Donald Trump’s “liberation day” tariffs.
The dollar rose slightly against the yen having slumped 2.2pc in the prior session, at one point dipping as low as 145.19 yen for the first time since October.
Overnight it tumbled 0.7pc to 0.8532 Swiss franc, another traditional safe haven, taking it to a fresh six-month nadir.
Chris Weston, head of research at Pepperstone, said: “‘Uncertainty’ is the word of 2025, and while we now have the tariff rates and the timeline, and Trump and (Treasury Secretary Scott) Bessent have shown some willingness to negotiate, the questions being asked of the market have only increased.
“The loss of confidence to hold US dollars is clear.”
07:48 AM BST
Traders bet Bank of England will cut rates three times this year
Traders are betting that the Bank of England will cut interest rates three times this year as Donald Trump’s trade war risks a global recession.
Money markets have put a 96pc chance on policymakers announcing a reduction in borrowing costs at their next meet in May, with cuts again by August and then by December.
It comes as Wall Street giant JP Morgan raised the odds on a global recession this year from 40pc to 60pc, as it dubbed the “liberation day” levies the largest tax hike on US households and businesses since 1968.
Chief economist Bruce Kasman said: “The effect of this tax hike is likely to be magnified — through retaliation, a slide in US business sentiment, and supply chain disruptions.”
He added: “There will be blood.”
07:38 AM BST
Lammy criticises Trump’s ‘return to protectionism’
David Lammy said Donald Trump was taking the US back to a trading approach not seen “for nearly a century” as the Foreign Secretary criticised the “return to protectionism”.
Mr Lammy repeated the Government’s line that “all options are on the table” in terms of how the UK could respond to Mr Trump’s decision to impose a 10pc tariff on British goods.
He was asked as he attended a Nato summit in Brussels when the UK would stand up to “American bullying”.
He replied: “The United Kingdom, like France, is a great maritime nation, we are a nation that believes in open trade and I regret the return to protectionism in the United States, something that we have not seen for nearly a century.
“As you know we are consulting with business and industry at this time.
“We are engaged in discussions with the United States to strike an economic agreement and an economic deal and of course we have been absolutely clear that all options are on the table as we ensure the national interests of the British people, who will be very concerned at this time about how this affects the bottom line for them and their economic welfare.
“We will put their national interests first and it is in their national interests to be negotiating with the United States an economic agreement at this time but keeping all options on the table.”
07:36 AM BST
IMF boss warns Trump tariffs pose ‘significant risk’ to world economy
The head of the International Monetary Fund (IMF) has warned that Donald Trump’s tariffs pose a “a significant risk” to the world economy.
Kristalina Georgieva said officials were assessing the implications of the US president’s “liberation day” tariffs.
She said: “It is important to avoid steps that could further harm the world economy.
“We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty.”
07:29 AM BST
Turkey to seek talks on removing 10pc tariff
Turkey has said it wants to negotiate with the US to lift the 10pc additional tariffs announced by President Donald Trump.
Trade minister Omer Bolat said the levies were the “best of the worst” given higher tariffs placed on many other countries, including the EU.
He said: “We want to discuss the issue in negotiations with the US Department of Commerce and Trade Representative... since there is a $2.4bn surplus in favour of the US in trade between the two countries for 2024.”
07:20 AM BST
Traders ramp up bets on interest rate cuts
The cost of government borrowing has fallen sharply as money markets priced in more interest rate cuts by the US Federal Reserve in the wake of Donald Trump’s tariffs.
The benchmark 10-year US Treasury yields slid under 4pc as traders at one point overnight priced in more than a whole percentage point of rate cuts this year.
The benchmark 10-year Treasury yield struck a six-month low of 3.97pc, while the two-year yield bottomed at 3.61pc, also its lowest level since October.
US Treasury yields have fallen as investors poured into the safe-haven bonds. Bond yields move inversely to prices.
It has also helped bring down the cost of UK government borrowing, with the 10-year gilt yield down from 4.64pc before Mr Trump’s announcement to 4.52pc at the close on Thursday.
David Doyle, head of economics at Macquarie Group, said: “Central banks are not well-equipped to deal with stagflation as the impacts of slower growth and higher inflation pull policy in opposing directions.
“This means that stronger core inflation is likely to limit the extent of any policy response from the Fed due to the headwinds created for growth.”
07:19 AM BST
Trump claims Starmer ‘very happy’ with tariffs
Sir Keir Starmer was “very happy” with the treatment given to Britain by Donald Trump over tariffs, according to the US president as his levies continued to rock financial markets.
Mr Trump said he had a “very good dialogue” with the Prime Minister as he referred to his decision to sign off the deal for Britain to give away the Chagos Islands to Mauritius.
The US president hit Britain with 10pc tariffs as he unveiled his “liberation day” import taxes on countries around the world. The levies against Britain were the joint lowest imposed on any nation.
Mr Trump told reporters on Air Force One: “I think he was very happy about how we treated them with tariffs.”
The president said the turmoil in financial markets was “to be expected” as he had inherited a “terrible economy”.
Overnight, Japan’s Nikkei tumbled nearly 3pc, having earlier been on course to lose nearly 10pc for the week, which would have been its worst weekly performance since the onset of the pandemic in March 2020.
That came after S&P 500 companies lost a combined $2.4 trillion in stock market value on Thursday in their biggest one-day loss since Covid sparked global lockdowns five years ago.
06:54 AM BST
Good morning
Thanks for joining me. Sir Keir Starmer was “very happy” with the 10pc tariffs imposed on the UK by the US, according to Donald Trump.
The President said the Prime Minister approved of the treatment affording to Britain after he unveiled his “liberation day” tariffs on Wednesday.
Financial markets continued their sharpest falls since the onset of the pandemic overnight.
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What happened overnight
Asian shares slid further after Donald Trump’s tariffs sent shudders through Wall Street at a level of shock unseen since the pandemic pummelled world markets in 2020.
Everything from crude oil to Big Tech stocks to the value of the US dollar against other currencies has fallen.
Even gold, a traditional safe haven that recently hit record highs, pulled lower after Trump announced his “liberation day” set of tariffs,’ which economists say carries the risk of a potentially toxic mix of weakening economic growth and higher inflation.
Markets in Shanghai, Taiwan, Hong Kong and Indonesia were closed for holidays, limiting the scope of Friday’s sell-offs in Asia.
Tokyo’s Nikkei 225 lost 4.3pc to 33,263.58, while South Korea’s Kospi sank 1.8pc to 2,441.86.
The two US allies said they were focused on negotiating lower tariffs with Trump’s administration.
Australia’s S&P/ASX 200 dropped 2.2pc to 7,684.30.
US stock markets plunged yesterday amid fears that Mr Trump’s tariffs would prompt a global trade war that tips the world into recession. Around $2.5 trillion was erased from the S&P 500, which lost nearly 5pc on its worst day since the pandemic.
The Nasdaq led declines on Wall Street, ending the day down 6pc in its biggest daily fall since March 2020, while the S&P 500 and Dow Jones Industrial Average posted their biggest daily percentage declines since June 2020.
The Dow fell 4pc, to 40,545.93, the S&P 500 dropped 4.8pc, to 5,396.52, and the Nasdaq Composite sank 6pc, to 16,550.61.
In the bond market, the yield on benchmark 10-year US Treasury notes tumbled to 4.033pc last night after falling to a low of 4.004pc, its lowest since November 25. It had been 4.059pc late on Wednesday.