Ouch! Wall Street has suffered its worst day since the early months of the Covid-19 pandemic.

As the closing bell rings out across the New York Stock Exchange, a brutal wave of selling has driven the main indices to their worst one-day falls in around five years.

The S&P 500 index is down 4.9% at the close, which Reuters flags is the biggest one-day drop since June 2020.

The Dow has also posted its biggest one-day drop since June 2020, down 4%.

Donald Trump’s claim today that the markets are going to boom has a rather hollow ring.

Especially as it was a particularly grim day for tech stocks – the Nasdaq tumbled 5.9%, its worst one-day performance since March 2020, when fears over the pandemic were rocking markets.

The scale of the selloff, wiping trillions of dollars off the value of US companies, highlights just how alarmed investors are by the tariffs announced by Donald Trump last night, and the fears they could lead to a recession.

That’s all from our coverage of the global market reaction to the Trump trade war, until tomorrow.

Our US Politics Live blog is covering all the action:

Goodnight. GW

On days such as today, braver investors can be tempted to ‘buy the dip’, calculating that what goes down must go up again.

But today, legendary investor Bill Gross is urging prospective dip-buyers to stay on the sidelines.

Gross told Bloomberg that the Trump tariffs are comparable to Richard Nixon’s decision to break the US dollar’s link to gold in 1971.

“Investors should not try to ‘catch a falling knife’.

This is an epic economic and market event similar to 1971 and the end of the gold standard except with immediate negative consequences.”

Donald Trump has claimed that his new tariff plan is “going very well.”, despite world stock markets taking a hammering today.

CNBC reports:

“The markets are going to boom, the stock is going to boom, the country is going to boom,” he told reporters as he departed the White House.

“The rest of the world wants to see, is there any way they can make a deal?” he said.

There’s no sign of this ‘boom’ yet, though…

The head of America’s Federal Trade Commission, Andrew Ferguson, has warned US retailers not to use tariffs as an excuse to hike prices.

He posted on X:

President Trump is reorienting our nation’s economy to put Americans first. As we adjust to the new economic order, the @FTC will be watching closely to make sure American companies are vigorously competing on prices.

These necessary tariffs should not be interpreted as a green light for price fixing or any other unlawful behavior. We will always protect American consumers.

This could be an interesting issue to adjudicate on. The new tariff of 20% means goods from Europe will cost US importers a fifth more than before. But that doesn’t justify raising the price paid by consumers by 20%, given other costs – such as wages, transport – won’t have also risen in line with tariffs.

So much for the idea that “liberation day” would free financial markets from their fear of the unknown, my colleague Nils Pratley writes.

Publication of precise tariff rates, went a cheerful line of advance thinking, would at least allow investors to assess the probable trade effects on the basis of hard information. True optimists clung to the idea that Donald Trump would not wish to risk a truly severe market reaction.

That narrative was blown apart when the president reached for his pub-style display of wares. This really was a case of going back to the tariffs rates of the 1920s or 1930s. Not even the penguins of Heard Island and the McDonald Islands were spared….

On a lighter note…

Percy Pig’s US invasion could be called to a halt amid fears that Donald Trump’s tariffs could affect sales of Marks & Spencer’s popular confectionery brand which has just launched in Target stores across the Atlantic.

Archie Norman, the chair of M&S, has described Percy as the retailer’s “gift to America” but he told the Retail Technology Show in London that “we might have to change our minds” as Trump imposes additional taxes on imported goods. While M&S is not considering withdrawing the sweets, tariffs could push up prices and make them less popular.

The pink confectionery which sells more than 18m bags a year in the UK and is apparently enjoyed by celebrities including Adele and Olivia Rodrigo, went on sale in the US on 30 March both in Target stores across the US and on its website in what was described as Percy’s “biggest journey to date”.

Back in New York, the sell-off is refusing to abate.

With around two hours trading to go, the Dow Jones industrial average is still suffering a quadruple-digit points slump – it’s down 1,354 points or 3.2% at 40,870.

The S&P 500 index is down over 4%, while the tech-focused Nasdaq has shed 5.2%.

These are seriously painful losses, reflecting concerns that Donald Trump’s trade war will hurt the US economy, and the rest of the world too.

WTO director general Ngozi Okonjo-Iweala has issued a statement about the new US tariffs:

“These measures, coupled with those introduced since the beginning of the year, could lead to an overall contraction of around 1% in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections.

I’m deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade.”

With European markets closed, and New York traders contemplating a quick lunchtime break, it’s time for another recap.

US stock markets have tumbled on Thursday as investors parsed the sweeping change in global trading following Donald Trump’s announcement of a barrage of tariffs on the country’s trading partners.

All three major US index funds were down as trading started on Thursday morning. The tech-heavy Nasdaq fund was down 4.5%, while S&P 500 and the Dow dropped 3.4% and 2.7% at opening, respectively.

Bloomberg calculated that around $2 trillion has been knocked off the value of the S&P 500 index today, with tech giant Apple among the big fallers.

Meanwhile, the US dollar hit a six-month low, going down at least 2.2% on Thursday morning compared to other major currencies.

• This followed heavy losses in Asia, where Japan’s Nikkei index slumped to an eight-month low.

• Amid a sharp selloff in Europe, Britain’s FTSE 100 posted its biggest one-day fall since last August.

• Economists have been slashing their growth forecasts today, as they have digested the sweeping tariffs announced by Donald Trump last night. Some have warned that the US could slip close to recession.

• Forecasts for how high the US stock market will rise this year have been dramatically scaled back too.

• UK farmers warned they would be hurt by new tariffs…..amid warnings of ‘global economic warfare’.

“Donald Trump might be able to write off some of today’s commentary as hyperbole but even he can’t ignore the numbers,” says Danni Hewson, head of financial analysis at AJ Bell, adding:

“For a president who used to use Wall Street as his own personal scorecard, today’s market assessment of his tariff plans has been damning. Around $2.2 trillion has been wiped off the value of global stock markets at the time of writing, with the US bearing the brunt of the tariff induced sell-off and the Nasdaq set to experience its largest daily drop since March 2020.

“Comparisons will be made to 2020’s global pandemic and 2008’s financial crash, but looking forward we must consider that ‘Liberation’ may ultimately end in recession.

“Companies like Apple, which relies on its complicated global supply chain and on positive consumer sentiment, slumped a whopping 8% as investors pondered exactly how badly the tech company’s bottom line will be thwacked by this White House policy. Other tech companies from Dell to HP suffered double digit declines, along with retailer Target, Nike, and perhaps most ironically, the quintessential American brand Ralph Lauren was one of the biggest fallers on the S&P 500 today.

Economists have also been alarmed by the calculation dreamed up by the White House to calculate the new tariffs announced last night:

Newsflash: Britain’s stock market has recorded its biggest one-day fall in eight months, as fears over Donald Trump’s escalating trade war triggered a wave of selling.

The FTSE 100 index of blue-chip shares has closed after a day of heavy losses, down 133 points or 1.5% at 8,474 points.

That’s its biggest daily drop since early August last year, when markets were tumbling on fears of a US recession.

Bank stocks led the fallers, with Standard Chartered down 13%, HSBC falling 8.8% and Barclays losing 8.7%.

Miners were also hit, by fears that a global downturn would hurt demand for commodities such as iron ore, copper and coal.

There is no chance Donald Trump will back off his tariffs, Commerce Secretary Howard Lutnick has declared.

In a blow to hopes that Trump could be intimidated into reversing course, Lutnick told CNN:

“The president is not going to back off what he announced yesterday. He is not going to back off.”

An “unprecedent shock” is about to hit the global economy, Dutch bank ABN Amro has told clients.

ABN Amro predicts that both the US and the eurozone to slow sharply and only just skirt a recession, while the US will also have to deal with higher inflation.

It says:

The White House’s reciprocal tariff plan had been billed as a game changer, and the ‘Liberation Day’ announcement yesterday certainly lived up to that.

In our new base case, the eurozone will see an earlier and bigger downward growth shock, and alongside the US is likely to skirt recession for the remainder of 2025. A recession is not our base case but the risk has risen significantly. For next year, we expect much higher fiscal spending in Europe (both defence generally and in Germany infrastructure) to lead to a rebound in growth.

Nearly $300bn has been wiped off Apple’s value today, amid the stock market turmoil.

Apple’s shares are currently down 9%, which by my maths cuts its market capitalisation to around $3.07 trillion, down from $3.367tn last night.

Apple will be hurt by the new US tariffs on imports from China, Taiwan, India and Vietnam, as much of its manufacturing and supply chain is based in the Asia-Pacific region.

Ben Barringer, global technology analyst at Quilter Cheviot, told clients:

“Apple makes 90% of its products in China, with 10% in other Asian countries such as Vietnam and India. These countries are facing the harshest tariffs, so we can expect iPhones and Apple Watches to go up in price, while hitting the profits of the company significantly. Switching production to the US is neither easy, nor cheap.

The tariffs are also likely to create demand destruction, which means cutbacks on software and cloud spending. Alphabet, will see a double whammy with digital advertising also cut back on in a tougher economic environment – with Meta also being hit in this regard.

Trump’s tarrifs could spark global economic warfare, fears Dr Eric Golson, Associate Professor of Economics at the University of Surrey.

“Lower tariffs were the result of a series of compromises on trade, intellectual property and services in the 1990s. Undoing the trade compromises risk spilling over from trade to full-scale economic warfare. A 24% average weighted tariff is about ten times current US levels. The EU, Chinese and others will definitely consider going after America’s weaknesses including patents and services. American businesses could find themselves fighting a multi-front economic war with their own government on tariffs and everyone one else trying to protect their patents and services.

“Another question that large economic powers could pose in response to these unilateral tariff actions could be around global capital mobility - going right to the core of globalisation.”

It’s unusual to see a trader actually running on the Wall Street trading floor, but this was the scene at the opening bell in New York today:

Other traders were heads-down juggling their buy and sell orders:

There’s no respite for the US dollar yet either.

The US currency has now slumped by 2.2% so far today against a basket of other major currencies, to a six-month low.

It’s sharply down against the euro, which has jumped by nearly two and a half cents to trade at $1.109, its highest since the start of October last year.

As we reported earlier, Deutsche Bank has warned there is a risk of a ‘confidence crisis’ in the US dollar.

Francesco Pesole, a currency strategist at ING, has said (via the Financial Times):

“The collapse is a loss of confidence in dollar-denominated assets in general.

“It’s a vote of no confidence on 100 days of Trump.”

Newsflash: Stocks are tumbling on Wall Street at the start of trading, as New York traders give their verdict on the new trade war unleashed by the White House last night.

As the opening bell rang out across the New York stock exchange, the Dow Jones industrial average, which tracks 30 of the largest US companies, promptly plunged by 1,137 points, or 2.7%, to 41,087 points.

Nike is the biggest faller, sliding by over 10%, while Amazon and Goldman Sachs have both dropped by around 6%.

The broader S&P 500 share index is sliding down too – it’s down 3.3% in early trading.

The tech-focused Nasdaq is being hammered, down 4.5%.

This follows heavy losses in Asia-Pacific markets earlier today, where Vietnam’s main share index slumped by 6.8% after Vietnamese goods were hit with a new 46% tariff.

European markets are deep in the red too, with the UK’s FTSE 100 index is now down 1.6% or 138 points, at 8469 points.

Markets have been shaken by Donald Trump’s new tariffs, which are widely expected to hurt the outlook for global growth and inflation.

Chris Iggo, chief investment officer for Core Investments at AXA, explains:

The sweeping tariff package came in at the high end of expectations and, according to analysts, will increase the effective tariff on imports to the US to between 20% and 25%.

Some analysts suggest that US economic growth could be reduced by 1% to 2% while inflation will move higher. This will be seen as a stagflation for the US economy. Tariffs on goods from the rest of the world should reduce export growth and will be a negative growth shock, with Asia and Europe most affected given the size of the proposed tariff rates.

Tensions is mounting on Wall Street as investors brace for stock trading to begin.

Yesterday’s announcement of new global tariffs by Donald Trump was made just after the US stock market closed on Wednesday, so traders will be itching to respond.

The futures market suggests US stocks will suffer heavy losses; the S&P 500 share index is currently down by a hefty 3.7% in pre-market trading.

Confidence in the US stock market has been dented in recent weeks by fears of a global trade war.

Today, Capital Economics have slashed their forecast for the S&P 500’s end-of-year close, to 5,500 points, down from 7,000 points previously.

Their chief markets economist, John Higgins, says:

This is roughly 10% below its closing peak on 19^th February and not far from where it may open today after some initial fall-out from the tariff news.

Higgins adds that there are two reasons for this “significant” downgrade:

The first is yesterday’s announcement of greater tariffs on US imports than we had assumed. In such circumstances, we no longer think the economic backdrop will be sufficiently conducive to a rally in equities. The second is a recent shift in the AI narrative, which has shaken our conviction that big-tech will drive up the index.

Newsflash: Ratings agency Fitch has cut its credit rating on China.

Fitch has downgraded China’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘A’ from ‘A+’, with a stable outlook.

Fitch says it acted due to China’s rising debts, and deteriorating public finances:

The downgrade reflects our expectations of a continued weakening of China’s public finances and a rapidly rising public debt trajectory during the country’s economic transition. In our view, sustained fiscal stimulus will be deployed to support growth, amid subdued domestic demand, rising tariffs and deflationary pressures.

This support, along with a structural erosion in the revenue base, will likely keep fiscal deficits high. We expect the government debt/GDP to continue its sharp upward trend over the next few years, driven by these high deficits, ongoing crystallisation of contingent liabilities and subdued nominal GDP growth.

This does not appear to be a direct response to Donald Trump’s decision to impose a new 34% tariff rate on China.

Fitch says it has not yet calculated the impact, explaining:

While the 2 April reciprocal tariff announcements are not yet incorporated into our forecasts and there is uncertainty about their impact, there is headroom at the current rating to accommodate the likely implications for economic growth and fiscal metrics.

The oil price is cratering, on growing fears that Donald Trump’s trade war could trigger a recession.

Brent crude has now plunged by 5.8% so far today to $70.61 per barrel.

US crude is being hit even harder, down 6% at $67.34 per barrel.

David Morrison, senior market analyst at Trade Nation, says oil has fallen as the scale and scope of Trump’s tariffs, and their impact on the global economy, became apparent.

Energy imports are largely unaffected tariff-wise. But investors were reacting to the estimated damage these tariffs could do to global trade, and therefore global economic growth.

The size of the tariffs are such that business activity could slow sharply, leading to significantly lower demand for oil.

Newsflash: U.S.-based employers announced 275,240 job cuts in March, driven by Elon Musk’s slashing of the Federal government.

Consultancy firm Challenger, Gray & Christmas have reported that job cut announcements rose 60% month-on-month, and were 205% higher than in March 2024.

That’s a record high for any March, and the third-highest monthly total ever recorded.

Of that total, 216,670 were due to “DOGE Actions” – Musk’s campaign to improve government efficiency by making drastic cuts to government bureaucracy.

Andrew Challenger, senior vice president and workplace expert for Challenger, Gray & Christmas, explains:

“Job cut announcements were dominated last month by Department of Government Efficiency [DOGE] plans to eliminate positions in the federal government. It would have otherwise been a fairly quiet month for layoffs.”

Over in parliament, business secretary Jonathan Reynolds has told MPs that the UK will consult British businesses on how the Government could impose retaliatory trade tariffs on the US.

In a statement to the House of Commons, Reynolds says he is opening a consultation on possible retaliatory tariffs.

Reynolds explains:

It remains our belief that the best route to economic stability for working people is a negotiated deal with the US that builds on our shared strengths.

However, we do reserve the right to take any action we deem necessary if a deal is not secured.

To enable the UK to have every option open to us in future, I am today launching a request for input on the implications for British businesses of possible retaliatory action. This is a formal step necessary for us to keep all options on the table.

We will seek the views of UK stakeholders over four weeks until 1 May 2025 on products that could potentially be included in any UK tariff response.

This exercise will also give businesses the chance to have their say and influence the design of any possible UK action.

My colleague Andy Sparrow’s Politics Live blog has more details:

Britain’s energy sector is digesting the impact of Donald Trump’s new tariffs.

A senior energy industry executive told the Guardian:

“No one is quite sure what this will mean for the global supply chains.

There is an environment of uncertainty about investment. There are a lot of people being cautious - they’re not making a decision either way about anything. They’re saying, ‘let’s stop, take a breath, and see what happens’.

If you want economic growth that’s not a good thing, and the Chancellor and the Prime minister will no doubt be worrying about that. But there’s a lot that is within the control of the government which can encourage investments if they get the right frameworks and regulation in place. The only country that can screw that up for the UK, is the UK.”

And seperately, RenewableUK’s deputy chief executive Jane Cooper has warned that Trump’s tariffs risk pushing up prices for consumers and harming industry.

Cooper says:

“Tariffs and trade disputes risk pushing up prices for consumers and harming industry, so the priority must be resolving this dispute and developing a UK trade strategy that strengthens our energy security and reduces risks to the UK supply chain. These tariffs, combined with the US Government’s recent moves to halt the development of offshore wind, will mean American and UK companies will miss out on opportunities to trade, invest and collaborate in innovative clean technology.

“While trade in goods for renewables between the US and UK is relatively limited, we are concerned at the wider impact these tariffs could have on the supply chain in the UK and across Europe. Many of our manufacturers operating in the UK - and collectively employing thousands of people here - also have factories in the EU, so President Trump’s announcements will have a far-reaching impact across our sector”.

After a volatile morning on Europe’s financial markets, here’s a quick recap of the situation.

The US dollar has tumbled today as investors fear that Donald Trump’s new trade war could trigger a recession.

The dollar is down around 2% against a basket of other currencies, a sizeable selloff, after investors were startled by the scale of the tariffs announced by the US president last night.

The dollar is now down at a six-month low, with Deutsche Bank warning its clients to “beware a dollar confidence crisis”.

Deutsche says:

The safe haven properties of the dollar are being eroded and this is imposing a significant cost on unhedged dollar holdings. Beyond that, developments since the start of the year make us worried about a broader undermining of confidence in the US economic outlook and the medium-term desirability of dollar allocations.

European stock markets have had a rough morning. Banks and miners have fallen on fears of an economic downturn. Luxury goods stocks are also lower, an anticipation that their exports to the US will be hurt by new tariffs.

Here’s the situation:

• FTSE 100: down 130 points or -1.5% at 8477 points

• Germany’s DAX: down 496 points or 2.2% at 21,894 points

• France’s CAC: down 195 points or 2.5% at 7,662 points.

That followed a sharp plunge in shares across the Asia-Pacific, where Japan’s Nikkei lost 2.7%.

The sell-off came after China was hit with a 34% fee, in addition to a 20% tariff on all Chinese imports already in place, while the EU will now be levied at 20% and Japan at 24%. Trump said America had been “looted, pillaged and raped” by its trading partners: “In many cases, the friend is worse than the foe.”

Wall Street is heading for heavy losses when trading begins in New York at 9.30am local time (2.30pm BST).

Economists are warning that Trump’s tariffs will push the US’s effective tariff rate to its highest level in over a century.

Raphael Olsyzna-Marzys, international economist at J. Safra Sarasin Sustainable Asset Management, says:

The US effective tariff rate is set to rise to around 25%, the highest level since the start of the 20th century. This will have a large and direct negative impact on the US economy, pushing growth lower and prices higher. Global growth will also be weaker.

What happens next will depend on how countries respond, but we expect some escalation before any eventual de-escalation. Outside the US, the most significant impact will be on Germany and Asian economies. A deteriorating growth outlook is likely to push central banks to lower policy rates, but they will need to ensure that longer-term inflation expectations stay anchored. Still, we think that bond yields will fall further and continue to favour intermediate maturities. Current US equity valuations are not priced for a significant slowdown.

We still prefer UK equities, defensives over cyclicals and value overgrowth. Finally, the US dollar is likely to suffer from relative growth headwinds. Safe-haven currencies should do well in the near term.

In other developments:

• Economists have questioned the maths used by the White House to calculate its new tariffs.

• The City has raised its expectations for cuts to eurozone interest rates

• Sir Keir Starmer has pledged to react in the UK’s national interests.

• US tariffs are a “major blow” to the world economy and the EU is preparing counter measures that will apply if negotiations fail, EU Commission chief Ursula von der Leyen has said. “The global economy will massively suffer, uncertainty will spiral and trigger the rise of further protectionism,” she said.

• China’s commerce ministry called for Washington to “immediately cancel” the new tariffs, warning they “endanger global economic development” and would hurt US interests and international supply chains. It called for dialogue and added: “There is no winner in a trade war, and there is no way out for protectionism.”

Britain’s farmers have warned that tariffs will “increase the challenge for the UK and agriculture” at a time when the US is the largest market outside of the EU for UK agri-food products.

British-made meats, cheese and traditional tastes like tea and biscuits have proved popular with American consumers in recent times. Among agri-food products, Scotch whisky, beer and salmon are commonly transported across the Atlantic.

The National Farmers’ Union (NFU said it also had concerns that food from other nations originally destined for the US may be diverted instead to Britain, “negatively impacting” the UK market.

NFU president Tom Bradshaw said:

“The United States is the largest market for British agri-food products outside of the European Union and our farmers are proud to supply high quality, authentic, and unique British meats and cheeses to American consumers.

We stand united in our desire to work together to ensure British farmers and growers are at the forefront of any decision-making and will continue to work hand in glove with government as the situation develops.”

Donald Trump’s new trade war is going down like a cup of cold sick on Wall Street.

The futures market is indicating that the Dow Jones industrial average (which tracks 30 large US companies) is on track to fall 2.7% when trading begins in around three hours time.

The broader S&P 500 index is set for a bumpier fall – its down 3.4% in the futures market. The tech-focused Nasdaq index is down 3.8% pre-market.

Traders will be calculating that the imposition of new tariffs on imports into the US will hurt its economy, especially if other countries take retaliatory action by imposing tariffs on US exports.

Analysts at wealth manager Julius Baer say:

The U.S. tariffs put the rest of the world into a poor position for retaliation and negotiation, likely leading to a period of uncertainty and potential risks to global growth and U.S. inflation over the next 3-9 months. The more retaliations, the worse, and the more self help at home, the better.

Julius Baer remains cautious on U.S. equities and sees better opportunities in Europe and China.

The tariffs are likely the start of negotiations that could lead to lower trade barriers than those announced on Wednesday, potentially dragging on for 3-9 months and driving uncertainty during that period.

Oooh. Deutsche Bank are now warning clients to “beware a dollar confidence crisis”.

George Saravelos, Deutsche’s head of FX Research, fears that confidence in the US dollar, and America’s economy, is being undermined

This is a timely warning, as the US dollar has sunk by 1.7% so far today as it weakens sharply against other currencies.

Saravelos writes:

The safe haven properties of the dollar are being eroded and this is imposing a significant cost on unhedged dollar holdings. Beyond that, developments since the start of the year make us worried about a broader undermining of confidence in the US economic outlook and the medium-term desirability of dollar allocations.

Saravelos says this risks “a self-fulfilling unwind” of extreme US asset overweight positions from countries that have exported capital to the US over the last decade.

Most of the developed world belongs to this category. At the end of the day, the US has a large current account deficit, and the currency is reliant on capital inflows for stability. A drop in the dollar, a drop in US equities and a rise in term premium in US treasuries would be the strongest market signal that a process of US disinvestment is accelerating. A rise in term premia on US treasuries has not materialized yet, but it would be a very negative signal if it did.

Our overall message is that there is a risk that major shifts in capital flow allocations take over from currency fundamentals and that FX moves become disorderly. We would caution that if the dollar decline accelerates, it would be a highly unwelcome development for global central banks. The last thing the ECB wants is an externally imposed disinflationary shock from a loss in dollar confidence and a sharp appreciation in the euro on top of tariffs. Expect pushback. We are in the midst of dramatic regime change in markets.

Markets have been caught off guard by the severity of Trump’s tariffs, reports. Jacob Falkencrone, global head of investment strategy at investment platform Saxo.

He flags there are growing fears that the trade war could lead to stagflation (rising prices but no growth) or a recession.

“While Trump claims the move will invigorate US manufacturing, many economists warn of potential negative impacts on the economy. The tariff offensive marks a significant economic turning point. With the US now enforcing what amounts to the steepest trade barriers in a century, the risks are more than just theoretical—they are visible in real time, and they are mounting.”

“The immediate concern is the US economy, where the average effective tariff rate is jumping nearly 19 percentage points. That’s a direct tax on consumption and corporate costs, especially for industries relying on imported materials. The result? Higher prices, tighter margins, weaker growth—and a heightened risk of recession. Economists warn that these tariffs could accelerate the arrival of stagflation, where inflation rises even as the economy stagnates or contracts.”

“Globally, the picture is just as concerning. China could lose up to 2.4 percentage points of GDP growth, according to recent forecasts, and the ripple effects could hit Europe, Asia, and emerging markets hard. This isn’t just a US-centric problem—it’s a potential global slowdown in the making.”

The sell-off in the US dollar is accelerating, dragging the greenback down to a new six-month low.

The dollar is sliding against rival currrencies, pulling the dollar index down to its lowest level since October.

The US dollar has turned out to be one of the biggest losers of ‘Liberation Day’, says Daniela Sabin Hathorn, senior market analyst at Capital.com.

The bottom line is that uncertainty remains high — even without considering that some of these new tariffs might be cancelled or revised after a few days of negotiations. Rough estimates suggest the economic impact could be even greater than the Smoot-Hawley tariffs of the 1930s - a set of protectionist trade policies that raised import taxes and are widely believed to have worsened the Great Depression by triggering global retaliation and slowing international trade [see earlier post for more details].

This isn’t just about trying to balance trade — it’s more like the U.S. is trying to become completely self-reliant. The U.S. is attempting to produce and consume everything internally instead of relying on global trade. At this level of tariffs, the U.S. would basically isolate itself economically, cutting off most of the relations with other countries. It’s hard to imagine this being an improvement to the current situation.

The UK economy will perform better than Europe this year, as the trade war drags the eurozone into recession, Tomasz Wieladek, chief European economist at T. Rowe Price, has predicted.

Wieladek predicts the UK will see a rise in cheaper imports, as goods producers look to avoid US tariffs:

The UK will be least affected by the new policies. I believe the overall negative effect on the UK economy will only be about 0.2-0.5% this year. This is mainly because trade diversion to the US via the UK is likely to be now significant. Plants producing anything in the UK will be more competitive than in the EU, which will support some domestic investment.

The UK is a trade deficit country, and President Trump has just created significant excess capacity across the world. UK households will now benefit from much cheaper goods, raising disposable income. Most importantly, the UK government implemented a large fiscal stimulus package six months ago, just in time to absorb the tariff hit.

Despite the headwinds, the UK will do better in 2025 than the EU. A mild recession in the euro area in 2025 is now probable. The ECB will cut rates below the neutral rate to 1-1.5%.

Japanese prime minister Shigeru Ishiba has said he is disappinted not to win an exemption from President Donald Trump’s new tariffs.

Ishiba also promised measures to help domestic industry deal with the fallout fromm the new 24% tariff which the US is imposing on imports from Japan.

Ishiba told reporters:

“We had been requesting that the U.S. government review its unilateral tariff measures at various levels and we are extremely disappointed and regret that such measures have been implemented nonetheless.”

He added that he will speak with president Trump as and when appropriate, saying:

“We will continue to strongly urge the U.S. to review its measures.”

While shares are sliding today, there’s a big rally into government bonds.

The prices of US Treasury bills, UK gilts, German bunds, and other eurozone government debt are all rallying today.

This is pulling down bond yields (the rate of return on the debt), with 10-year UK gilt yields down 6 basis points at 4.581%.

That might, superficially, sound like good news for finance ministers, as it shows new borrowing will be cheaper.

The problem, though, is that bond prices are rising/yields are falling as investors fear the global trade war will lead to a global recession, prompring interest rate cuts.

Kathleen Brooks, research director at XTB, says US trade policy has thrown “a grenade into the global economy”.

Brooks explains:

The bond market is a big winner.

Yields are falling sharply everywhere. The UK and European 2-year yields are lower, as the market rushes to price in rate cuts from the ECB and the BOE, as central banks are likely to step up to ease some of the pain from the US’s new global trade policy. 10-year yields are also lower, for example the 10-year Gilt yield in the UK is down 6bps so far on Thursday.

The UK yield curve is flattening, which is a sign that bond investors are pricing in the chance of a recession. US yields are also lower, but not by the same amount as Europe, suggesting that bond investors could be worried about the inflationary impact on the US economy.

There’s some surprise this morning that the White House appears to have used a rather blunt tool to calculate its new reciprocal tariffs.

Last night, Donald Trump brandished a board showing (he claimed) the tariffs which other countries were charging on the US. The new US tariffs have been set at half that rate.

However, rather than in-depth calculations, US officials have invented a formula based on the size of each country’s trade surplus.

Basically, the White House has taken the US’s goods trade deficit with each country and then divided it by the total amount of goods imported from that country.

[and then halved it, to get the new US tariff for each country, with a 10% minimum].

Deutsche Bank have crunched the numbers, and confirm:

Put simply, the bigger the nominal trade deficit a country has with the US adjusted for the absolute size of that country’s imports, the bigger the tariff.

The BBC’s Faisal Islam has posted the formula:

Deutsche Bank say this approach to calculating the tariffs “raises serious concerns about policy credibility, undermining the USD [the dollar].”

They draw three conclusions:

First, the US administration is squarely focused on penalizing countries with larger trade deficits in goods (services are ignored). This determination is highly mechanical, rather than a sophisticated assessment of tariff and non-tariff barriers. It is also in line with the declaration of a national emergency on the trade deficit used as a legal justification for the tariffs.

Second, there is a very large disconnect between communication in recent weeks of an in-depth policy assessment of bilateral trade relationships with different countries versus the reality of the policy outcome. We worry this risks lowering the policy credibility of the administration on a forward-looking basis. The market may question the extent to which a sufficiently structured planning process for major economic decisions is taking place. After all, this is the biggest trade policy shift from the US in a century. Crucially, major additional fiscal decisions are lining up over the next two months.

Third, the tariff calculation approach arguably makes for a more free-wheeling and open-ended nature to potential trade negotiations in coming months. It seems there are no specific and identifiable policy asks per se but ultimately a desire to reduce bilateral trade imbalances.

The Scottish whisky and salmon industries are “disappointed” with President Trump’s decision to impose 10% tariffs on British imports but have backed Keir Starmer’s efforts to win concessions from the US.

The Scotch Whisky Association said:

“The industry is disappointed that Scotch whisky could be impacted by these tariffs. We welcome the intensive efforts by the UK government to reach a deal with the US administration, and we continue to support this measured and pragmatic approach towards a mutually beneficial resolution.”

Tavish Scott, chief executive of Salmon Scotland, said:

“We have great confidence that Americans will continue to buy nutritious Scottish salmon, particularly when the country is reliant on imports to meet US consumer demand.

“Salmon producers want a business-like and stable trade relationship with the USA, so we support the UK government’s efforts to achieve that outcome through a calm and measured approach.”

Both sectors rely very heavily on US sales, particularly at the luxury end of their markets. The US is their second largest foreign customer. Industry bodies had been briefed by UK government officials that Trump’s tariffs on the UK could hit 20% so are likely to be relieved they were half that.

Scotland exports around £4bn worth of goods to the US, with whisky nearly a quarter of that trade at £971m last year. The US also bought £225m worth of Scottish salmon, which is the UK’s largest global food export by value, in 2024.

The tariffs will hit US businesses which rely on whisky and salmon. Kentucky bourbon makers sell their used barrels to Scotland for malt whisky maturation, so a fall in sales could hit that. High end US restaurants use premium Scottish salmon, airfreighted in from the UK.

Economists have calculated that the US tariffs would hit their highest level in over a century if the measures announced by Donald Trump last night are implemented in full.

Capital Economics have calcualted that the effective tariff rate on all imports will rise from 2.3% last year to around 26%, leaving it at a 131-year high, once you add the new reciprocal tariffs to the earlier hikes on goods from China, and the product-specific tariffs on steel, aluminum and autos.

They told clients:

Stepping back, the main message from President Trump’s “Liberation Day” announcement was that US tariffs were increased by more than even we had anticipated. Since election day, we have built our forecasts on an assumed that the US would impose a tariff of 60% on imports from China and 10% on imports from all other countries. That would take the effective US tariff rate to around 17%.

Instead, the system of reciprocal tariffs that was announced, together with the additional product-specific tariffs that appear imminent, will take the effective US tariff rate to just under 25%.

That, according to this chart from Capital Economics, would take the effective tariff rate higher than under the infamous Smoot-Hawley Tariff Act of 1930.

The Smoot-Hawley Tariff Act was brought in early in the Great Depression, as a protectionist measure to help US companies. But it is generally accepted it worsened the slump, which followed the Great Crash of 1929, by weakening global trade.

As Dr Eric Golson, Associate Professor of Economics at the University of Surrey, recently explained:

History has shown that trade wars come with long-term economic pain. The Great Depression was exacerbated by an international tariff war, with global trade plummeting by 66% between 1929 and 1933, crippling American businesses and driving unemployment to catastrophic levels.

UBS have also calculated that the“US weighted average import tariff is back to pre-WW I levels”.

They told clients:

Combining all the tariffs, we believe the weighted average tariff for the US has increased to 24%, from just 2.5% at the start of the year, a 21.5pp increase, and equivalent to a $715bn increase in dollar terms.

Pharmaceuticals companies are avoiding the sell-off this morning, after avoiding the tariffs announced last night.

The fact sheet issued by the White House last night explains:

• Some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States.

That has prompted a small relief rally; in London, GSK are up 1.5% while AstraZeneca has risen by 0.6%. Switzerland’s Novartis has gained 0.65%.

But this could be short-lived, as Trump might yet announce more sector-specific tariffs.

As Bloomberg explains:

The president is looking into launching a so-called 232 investigation into pharmaceuticals and other sectors, including semiconductors and potentially critical minerals, according to a senior administration official. That action could lead to tariffs under the Trade Expansion Act, as it already has for cars and aluminum.

City investors are ratcheting up bets on interest rate cuts by major central banks, as policymakers try to fend off a global recession.

The money markets are now pricing in a 92% chance that the European Central Bank cuts eurozone interest rates at its meeting later this month, up from 80% on Wednesday.

The chances of a Bank of England rate cut in early May have also risen, to 77%.

European stocks have joined the global sell-off with gusto.

The pan-European Stoxx 600 index has fallen 1.5% at the start of trading, to its lowest level in over two months.

Germany’s DAX fell almost 2.5% at the start of tading in Frankfurt, while in Paris the CAC 40 is down 2.2% and Spain’s IBEX lost 1.5%.

Roman Ziruk, senior market analyst at global financial services firm Ebury, says:

“Trump’s “Liberation Day” announcements landed at the very negative end of market expectations, with the average tariff rate rising to over 20% from just 2.5% before Trump took office, the highest level since the early 20th century.

“Asian countries were hit the hardest, with some seeing punishing reciprocal tariffs of over 40% and China being hit with a massive 34% levy on top of the 20% already imposed since the start of Trump’s second term.

“On the other side of the spectrum are the UK and major Latin American countries, which were slapped with at most a 10% duty, with the EU in the middle at 20%.

Shares are falling in London at the start of trading, as City investors react to the swathe of tariffs announced by Donald Trump last night.

The FTSE 100 index of blue chip shares has plunged by almost 1.5% at the start of trading, down 125 points at 8481 points.

Mining companies such as Anglo American (-4.7%) and Antofagasta (-4.6%) are among the big fallers, along with banks such as Barclays (-4.1%) and HSBC (-3.5%).

That reflects fears that a trade war increases the risk of a global downturn, leading to more bad debt and less demand for commodities.

Daniel Murray, Deputy CIO & Global Head of Research at EFG, the Zurich-based global private banking group, says:

“The risk of a US and global recession has increased directly as a result of the US tariffs, as has the likelihood that inflation stays higher for longer. In turn, the possibility of stagflation makes life very difficult for central banks.”

Murray adds that the next few months are therefore likely to be volatile:

as (a) the tariffs starts to impact the global activity and inflation (b) other countries impose retaliatory measures on the US, potentially stoking a long drawn out phase of deglobalisation (c) the international political order re-aligns and countries reassess the nature of their relationship with the US, not just with regard to trade but more broadly including the implications for defence and the existing world order.

UK prime minister Sir Keir Starmer has told business chiefs in Downing Street:

“Last night the President of the United States acted for his country, and that is his mandate.

“Today, I will act in Britain’s interests with mine.”

PA Media reports that Sir Keir said as the Government moved “to the next stage of our plan”, the “decisions we take in coming days and weeks will be guided only by our national interest, in the interests of our economy, in the interests of businesses around this table, in the interests of putting money in the pockets of working people”.

He added:

“Nothing else will guide me, that is my focus.

“Clearly, there will be an economic impact from the decisions the US has taken, both here and globally.

“But I want to be crystal clear: we are prepared, indeed one of the great strengths of this nation is our ability to keep a cool head.”

British business minister Jonathan Reynolds has warned the tariffs announced by Donald Trump last night is a threat to the UK, because of the damage it will cause to global trade.

Speaking to Times Radio this morning, Reynolds explained that anything that disrupts the global trading system is a threat to the UK.

And even though the UK was hit with a smaller tariff than many other countries – 10%, rather than the EU’s 20% - Reynolds said he was “disappointed” to be tariffed at all.

He said:

Any barrier to trade, particularly between the UK and our major trading partner, which the US is, is a disappointment to me. It’s a challenge.

“So, I recognise that the UK is in a better position than a lot of other countries from what was announced last night, but I was still disappointed.”

Reynolds said the UK should ignore calls to trigger a larger trade war by retaliating. Instead, he said the British government woud stay calm and to talk to the US, and continue the work towards reaching an economic deal.

With the dollar sliding on the international markets, the British pound has hit its highest since last October.

Sterling has gained almost one cent so far today, touching $1.31 for the first time since last October.

The euro is up almost a cent too, at $1.095, as the dollar suffers a post-Liberation Day hangover.

Michael Brown, senior research strategist at Pepperstone, says financial market participants “view the dollar not as a haven, but as the asset most exposed to the utter incoherence and nonsense emanating from the White House.”

If you’re just joining us, here’s a rundown of the latest developments:

• US President Donald Trump has unveiled sweeping tariffs on some of the country’s largest trading partners. Trump said he would impose a 10% universal tariff on all imported foreign goods in addition to “reciprocal tariffs” ranging from 20% to more than 40% on dozens of countries.

• China was hit with a 34% fee, in addition to a 20% tariff on all Chinese imports already in place, while the EU will now be levied at 20% and Japan at 24%. Trump said America had been “looted, pillaged and raped” by its trading partners: “In many cases, the friend is worse than the foe.”

• The 10% universal tariff will go into effect on 5 April while the reciprocal tariffs will begin on 9 April.

• Stocks dived after the announcement, with technology shares particularly hard hit, while the price of gold hit a record high as investors scrambled for safety. Japan’s Nikkei was down 2.8% on opening, Hong Kong’s Hang Seng Index slid 1.6%, South Korea’s Kospi fell 2% and Australian shares fell 2%.

• US tariffs are a “major blow” to the world economy and the EU is preparing counter measures that will apply if negotiations fail, EU Commission chief Ursula von der Leyen has said. “The global economy will massively suffer, uncertainty will spiral and trigger the rise of further protectionism,” she said.

• China’s commerce ministry called for Washington to “immediately cancel” the new tariffs, warning they “endanger global economic development” and would hurt US interests and international supply chains. It called for dialogue and added: “There is no winner in a trade war, and there is no way out for protectionism.”

• War-torn and economically struggling countries are among those facing the highest tariffs. Myanmar, which is in the middle of a civil war and which was hit by an earthquake last week, was hit with a rate of 44%, while Sri Lanka is facing a 44% tariff and Lesotho a rate of 50%.

• The tariffs also hit the Heard Island and McDonald Islands, a group of barren, uninhabited volcanic islands near Antarctica, which form an external territory of Australia, as well as Norfol Island, which said it had no known exports to the US. Albanese said on Thursday: “Norfolk Island has got a 29% tariff. I’m not quite sure that Norfolk Island, with respect to it, is a trade competitor with the giant economy of the United States, but that just shows and exemplifies the fact that nowhere on earth is safe from this.”

Many people have been asking how the Trump administration worked out its tariffs, while many countries have been arguing the numbers bear no relationship with reality.

New Zealand’s trade minister insisted his country did not apply a 20% tariff to US imports, as suggested by Washington, while Australia’s prime minister, Anthony Albanese, insisted the US tariffs had “no basis in logic” and that “a reciprocal tariff would be zero, not 10%.”

One journalist claims to have discovered the answer, and analysts are suggesting he is likely correct.

“They didn’t actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country’s exports to us,” financial writer James Surowiecki wrote in a post on X.

“So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us.”

Then that number was divided in half as Trump said he was being “kind”. He also said the tariff calculations included “currency manipulation and trade barriers”.

An explanation of the calculations later posted on the office of the US trade representative appeared to confirm that the administration had used trade deficits divided by imports.

Mike O’Rourke, chief marketing strategist at Jones Trading, was quoted by CNN as saying:

While these new tariff measures have been framed as ‘reciprocal’ tariffs, it turns out the policy is actually one of surplus targeting ...

There does not appear to have been any tariffs used in the calculation of the rate. The Trump administration is specifically targeting nations with large trade surpluses with the United States relative to their exports to the United States.

A bit more from von der Leyen’s press conference. She said all businesses “big and small” would suffer “from day one”, affected by disruptions to supply chains and greater uncertainty as well as “burdensome bureaucracy”.

The costs of doing business with the United States will “drastically increase”, she said.

What is more there seems to be no order in the disorder. No clear path through the complexity and chaos as all US trading partners are hit.

For weeks, Donald Trump and his aides sought to brand Wednesday as “liberation day” in America. Many in the US could be forgiven for wondering what exactly they’ve just been liberated from.

Trump likes to present the world as black and white. The US is either winning or losing. A policy, deal or plan is the best or the worst. A person, country or company is supporting or screwing you.

There is rarely space for nuance, time for complexity, or tolerance for inconvenient facts. The simplicity of this narrative is its power.

By Trump’s telling, the US is about to raise trillions of dollars for the federal government by taxing the world, not its citizens: a typically black and white choice.

But reality is often more complex than rhetoric. There are myriad shades of gray.

Import tariffs are not paid by other countries. They are paid by importers – in this case, US firms and companies – buying goods from overseas. These costs often trickle down through the economy, raising prices at every clink in the chain.

Trump promised lower prices. He is betting his tariffs won’t raise them too high, for too long.

“This is going to be a big moment,” he said on Wednesday. “I think you’re going to remember today.”

He may well be right.

US tariffs are a “major blow” to the world economy and the EU is preparing counter measures that will apply if negotiations fail, EU Commission chief Ursula von der Leyen has said.

“We are already finalising the first package of countermeasures in response to tariffs on steel,” she said in a statement read out in Uzbekistan ahead of an EU-Central Asia partnership summit.

“And we’re now preparing for further countermeasures to protect our interests and our businesses if negotiations fail.”

Trump earlier unveiled a 10% minimum tariff on most goods imported to the US with a higher 20% rate for the EU.

Von der Leyen said the consequences of the US tariffs would be “immense”.

The global economy will massively suffer, uncertainty will spiral and trigger the rise of further protectionism.

The consequences will be dire for millions of people around the globe also for the most vulnerable countries, which are now subject to some of the highest US tariffs.

Japan’s trade minister says Tokyo told Washington that sweeping new US tariffs that include a 24% levy on Japanese imports are “extremely regrettable”, according to AFP.

“I have conveyed that the unilateral tariff measures taken by the US are extremely regrettable, and I have again strongly urged [Washington] not to apply them to Japan,” Yoji Muto told reporters, adding that he spoke with US commerce secretary Howard Lutnick before Donald Trump’s announcement.

“I also explained in detail how the US tariffs would adversely affect the US economy by undermining the capacity of Japanese companies to invest in the United States,” said Muto.

“We had a frank discussion on how to pursue cooperation in the interest of both Japan and the United States that does not rely on tariffs,” Muto said.

Chief cabinet secretary Yoshimasa Hayashi also told reporters that the tariffs may contravene World Trade Organization (WTO) rules and the two countries’ trade treaty.

“We have serious concerns as to consistency with the WTO agreement and Japan-US trade agreement,” he told reporters.

Japan has also failed to win exclusion from 25-percent tariffs on auto imports due to come into force later on Thursday.

Last year, vehicles accounted for around 28% of Japan’s 21.3 trillion yen ($142 bn) of US-bound exports, and roughly eight% of all Japanese jobs are tied to the sector.

China’s commerce ministry has called for Washington to “immediately cancel” sweeping new tariffs, warning they “endanger global economic development” and would hurt US interests and international supply chains.

“China urges the US to immediately cancel unilateral tariff measures and properly resolve differences with trade partners through equal dialogue,” the ministry said, adding: “There is no winner in a trade war, and there is no way out for protectionism.”

Trump has hit China with particularly stinging tariffs of 34% in addition to already existing 20% tariffs on all Chinese imports.

Beijing also accused the United States of a “typical unilateral bullying practice”.

Trump has said his tariffs are “reciprocal” but many experts say his administration’s estimates for levies placed on US imports by other countries are wildly exaggerated.

“The US claims to have suffered losses in international trade, using so-called ’reciprocity’ as an excuse to raise tariffs on all trade partners,” Beijing said.

“This approach disregards the balance of interests achieved through years of multilateral trade negotiations and ignores the fact that the US has long profited significantly from international trade,” it added.

In news you didn’t know you needed:

A group of barren, uninhabited volcanic islands near Antarctica, covered in glaciers and home to penguins, have been swept up in Donald Trump’s trade war, as the US president hit them with a 10% tariff on goods.

Heard Island and McDonald Islands, which form an external territory of Australia, are among the remotest places on earth, accessible only via a two-week boat voyage from Perth on Australia’s west coast. They are completely uninhabited, with the last visit from people believed to be nearly 10 years ago.

Nevertheless, Heard and McDonald Islands featured in a list released by the White House of countries that would have new trade tariffs imposed.

Read the full story below.

Canada’s exemption from Donald Trump’s global tariffs was “like dodging a bullet into the path of a tank”, say business leaders as other levies are poised to hit key industries that drive the country’s economy.

In a theatrical unveiling of tariffs on countries with “unfair” practices on Wednesday afternoon, Canada was noticeably absent, alongside trade ally Mexico.

But speaking speaking to reporters on Parliament Hill, prime minister Mark Carney said 25% tariffs on Canadian steel and aluminum, as well as on automobiles, will come into effect within hours.

Canada would “fight these measures with countermeasures” he said, ahead of a meeting with cabinet ministers. “In a crisis, it’s important to come together. It’s essential to act with purpose and with force and that’s what we’ll do.”

Already, Canada had put a 25% tax on C$30bn ($21bn) worth of US goods in response to Trump’s tariffs. Among the products targeted are spirits, wine and orange juice – items meant to inflict targeted economic pain. The federal government has repeatedly pledged to keep its retaliatory measures until the US lifts all levies on Canadian products.

The prime minister is expected to outline the next stages of Canada’s response on Thursday.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association posted on social media the result was “like dodging a bullet into the path of a tank”.

Several Republican senators have joined Democrats to pass a resolution that would block Donald Trump’s tariffs on Canada, a rare rebuke of the president’s trade policy just hours after he announced plans for sweeping import taxes on some of the country’s largest trading partners.

In a 51-48 vote, four Republicans – Susan Collins of Maine, Lisa Murkowski of Alaska, and both Kentucky senators, the former majority leader Mitch McConnell and Rand Paul – defied Trump’s pressure campaign and supported the measure.

Democrats used a procedural maneuver to force a vote on the resolution, which would terminate the national emergency on fentanyl Trump is using to justify tariffs on Canada.

While Trump’s sweeping new tariffs, introduced in a White House Rose Garden ceremony on Wednesday, did not include additional levies on Canada, the Senate vote amounted to a significant bipartisan condemnation of the president’s escalating global trade war with allies and enemies alike.

“Tariffs will hurt our families. Canada is not an enemy,” the Democratic senator Tim Kaine, the bill’s sponsor, said in a floor speech on Wednesday.

Let’s not label an ally as an enemy. Let’s not impose punishing costs on American families at a time they can’t afford it. Let’s not hurt American small businesses. Let’s not make our national security investments in ships and subs more expensive.

Gold has reached a record high while the yen has strengthened against the dollar and stock markets have slumped after Donald’s Trump’s unexpectedly aggressive tariff announcement. Here’s the latest on the markets courtesy of Reuters:

The high-flying tech sector was pummelled as manufacturing hubs in China and Taiwan faced new tariffs above 30%, bringing the total new levy to an eye-watering 54% on imports from China.

“The US effective tariff rate on all imports look to be the highest level in over a century,” said Citi’s global rates trading strategist, Ben Wiltshire.

Nasdaq futures tumbled 4% and in after-hours trade some $760 billion was wiped from the market value of Magnificent Seven technology leaders. Apple shares, hit hardest as the company makes iPhones in China, were down nearly 7%.

S&P 500 futures fell 3.3%, FTSE futures fell 1.8%, while European futures fell nearly 2%.

Gold hit a record high above $3,160 an ounce, and oil, a proxy for global growth, slumped more than 3% to put benchmark Brent futures at $72.56 a barrel.

In early trade in Tokyo, the Nikkei was down 3.9% at an eight-month low, with nearly every index member falling as shippers, banks, insurers and exporters copped a beating.

Benchmark 10-year Treasury yields shot down 14 basis points to a five-month low of 4.04% as investors braced for slower US growth, while interest rate futures priced in a higher chance of interest rate cuts in the months ahead.

South Korea’s Kospi fell 2%. Van Eck’s Vietnam ETF fell more than 8% in after-hours trade. Australian shares fell 2%.

Markets in Taiwan were closed for a holiday.

China’s yuan touched a two-month low in offshore trade, ahead of the onshore open.

Ten-year Japanese government bond futures made their sharpest jump in eight months.

Donald Trump is finally making good on his campaign promises to “build that wall” – but instead of steel fencing along the Mexican border, it will be constructed from tariffs, and will enclose the entire United States.

In his pugnacious and typically rambling speech on the White House lawn on Wednesday, Trump set out plans for across-the-board import taxes, ranging from 10% to more than 40%.

The president promised “liberation”, yet the immediate impact is more likely to be rising prices for US shoppers and corrosive uncertainty for firms, exacerbating an economic slowdown that may already be under way.

Outside the wall, countries will be affected according to how dependent their economies are on exports to the US – and how exposed they are to the global trading system. For some, it is likely to be devastating.

The precise effects of sweeping tariffs on this historic scale are hard to predict. One factor is how rival economies will respond: retaliatory tariffs tend to make a bad situation worse, though they may make short-term political sense (see Mark Carney’s poll ratings in Canada).

Another question is whether the dollar may appreciate, somewhat softening the blow for US importers. That may limit the effect on prices, which would otherwise be expected to rise as the cost of importing products and materials increases.

The main challenge in assessing the exact impact of the plans, though, is that Trump’s statement did not mark the end of the period of profound economic uncertainty that began when he arrived in the White House – quite the opposite.

South Korea’s acting President Han Duck-soo has ordered emergency support measures for businesses that will be affected by the imposition of US tariffs of 25%, including automobiles, the industry ministry has said.

Han asked the industry minister to analyse the content of the tariffs and actively negotiate with Washington to minimise the impact of US reciprocal tariffs, the ministry said. Han said:

As the global trade war has become a reality, the government must pour all its capabilities to overcome the trade crisis.

Trump in his speech singled out Washington’s Asian security allies South Korea and Japan, accusing them of being among the worst offenders for conducting unfair trade practices against the United States.

Finance minister Choi Sang-mok and industry minister Ahn Duk-geun are to hold further meetings later on Thursday to discuss the tariffs’ impact on financial and foreign exchange markets, strategies for outreach to the US and the response of government and business, the news agency Yonhap reported.

Analysts in Seoul said Trump’s extensive rollout of tariffs was harsher than expected, casting a cloud over the export-reliant economy.

“For the domestic economy, a significant blow will be inevitable,” said Park Sang-hyun, an economist at iM Securities.

“It is clear that major export products such as automobiles will be hit hard, and exports to the US through production bases in Vietnam will also be hit hard,” Park said in a note.

US futures have fallen sharply, with the Dow Jones dropping 2.4% at around 2345 GMT, the Nasdaq index plunging 4.2%, and the broader futures index for the S&P 500 falling 3.5%. AFP reports:

Wall Street has largely suffered from Trump’s various trade announcements in recent weeks.

“The silver lining for investors could be that this is only a starting point for negotiations with other countries and ultimately tariff rates will come down across the board,” Northlight Asset Management’s Chris Zaccarelli wrote in a note to clients.

“But for now traders are shooting first and asking questions later,” he added.

The share price of technology companies whose components are produced abroad also fell sharply, with Apple losing 7.4% after-hours, Nvidia falling 5.2% and TSMC declining 5.9%.

Futures markets are typically much more volatile than the regular indices.

The clothing sector was also hit especially hard, with a particularly heavy bill for China, where products will be hit by an additional duty of 34% from April 9, and Vietnam, where the new “reciprocal” rate will be 46%.

Brands whose clothes are partly made in China or Vietnam were sharply lower, with Gap down 8.5% after hours, Ralph Lauren falling 7.3%, and Nike losing 7.1%.

Tokyo’s Nikkei index has opened 3.4% down after the Trump tariffs, while Australian shares are down 2%.

The benchmark Nikkei 225 index was down 3.42%, or 1,222.77 points, at 34,503.10 in early trade, while the broader Topix index was down 3.32%, or 87.93 points, at 2,562.36.

Nikkei average futures were also down 6% in the minutes before opening, Reuters reported.

In Australia S&P/ASX 200 index fell as much as 2.1% to 7,768 points by 0002 GMT. The benchmark recorded its biggest intraday loss since December 19, 2024.

“Stocks are diving following Trump unveiling tariffs that will hurt most global companies, Australian farmers, and investors alike”, said Jessica Amir, a market analyst at trading platform Moomoo.

The price of gold hit a new record after the tariff announcements.

Gold crossed the previous record of $3,149.14 an ounce at around 2300 GMT on Wednesday and then continued to climb above $1,350 an ounce, as traders piled into the safe haven asset amid a steep decline in stock market futures.

Strongly. The EU has already announced a string of tariffs it plans to introduce on US imports targeting steel and aluminium in kind, as well as textiles, leather goods, home appliances, house tools, plastics and wood.

Sources say it is also considering nuclear options, including tariffs on revenues generated in the EU by big tech firms and social media.

This could be seen as highly provocative and would put Trump’s allies, such as Elon Musk and Jeff Bezos, in the crosshairs. It would also test the unity of the EU, with Ireland expected to argue against more punitive measures because of the dominance of the US tech sector in Dublin.

Any action by the EU – which is targeted with a 20-percent tariff rate – “should be proportionate, aimed at defending the interests of our businesses, workers and citizens,” said Irish prime minister Micheál Martin.

Italian prime minister Giorgia Meloni on Wednesday called the new US tariffs on the EU “wrong”.

The EU’s preference is to negotiate so it has decided to delay countermeasures to open a space for talks. Maroš Šefčovič, the European commissioner for trade and economic security, has already met the US commerce secretary, Howard Lutnick, and, although Šefčovič reportedly came home last week “empty handed”, he is operating the Brexit playbook, hoping to build a personal relationship that will provide credit in the bank when they get down to talks.

EU chief Ursula von der Leyen is expected to give a reaction on behalf of the European Commission – which handles trade issues for all 27 countries in the European Union – at around 0300 GMT on Thursday – that’s in three hours – during a visit she is making to Uzbekistan.

The US tariff rate on all imports has rocketed to 22% from just 2.5% in 2024 under the new global levies imposed by President Donald Trump, Fitch Ratings’ U.S. economic research chief said on Wednesday. Reuters reports:

“That rate was last seen around 1910,” Olu Sonola, Fitch’s head of US economic research, said in a statement after Trump’s announcement for a global baseline import tax of 10%, but much higher rates for many trading partners.

“This is a game changer, not only for the US economy but for the global economy,” Sonola said. “Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time.”

Hello and welcome to our live coverage of reaction to the latest Trump tariffs, which were more aggressive than expected against major US trading partners and which sent shockwaves through global markets.

“This is the worst-case scenario that the market was expecting and that’s enough to potentially send the US into a recession,” said Jay Hatfield, CEO at Infrastructure Capital Advisors.

Speaking in the White House Rose Garden against a backdrop of US flags on what he called “Liberation Day”, Trump slapped sweeping 10% tariffs on imports from around the world.

He also unveiled particularly stinging tariffs of 34% on China, 20% on the European Union and 24% on Japan, saying they were “nations that treat us badly.”

He also hit some of the world’s poorest countries and those struggling with wars and natural disasters: Myanmar, which is embroiled in civil war and which was struck last week by a devastating earthquake, was hit with tariffs of 44% while Sri Lanka was hit with rates of 44%, Bangladesh a rate of 37%, Cambodia 49% and Syria 41%.

“For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” Trump said.

Wall Street was closed when Trump made his announcement but the S&P index was down 1.5% in after-hours trading. The dollar fell 1% against the euro as he was speaking, but then recovered.

US stock futures fell on the announcement, with S&P 500 E-minis down 3.5%, while the euro was down 0.3%. Markets in Asia are beginning to open now. We’ll bring you all the latest developments as they happen.

In the meantime, here’s what you need to know:

• The 10% universal tariff will go into effect on 5 April while the reciprocal tariffs will begin on 9 April.

• Special exceptions were made for Canada and Mexico, though the countries were previously targets of proposed broad tariffs. The White House said that goods covered by an existing trade deal with Canada and Mexico will continue to see no tariffs.

• Trump said the US would charge half of the fees he feels trading partners unfairly impose on the US because the US people are “very kind”.

• Trump zeroed in on the industry-specific tariffs countries have placed on American exports. In his speech, Trump criticized policies like the EU’s ban on imported chicken, Canadian tariffs on dairy and Japan’s levies on rice.

• The new tariffs come on top of a lineup of levies that Trump has already implemented: an additional 20% tariff on all Chinese imports and a 25% tariff on all steel and aluminum imports. There is also a 10% tariff on energy imports from Canada.

• Sweeping auto tariffs of 25% that Trump announced last week are also due to take effect at 12:01 am (0401 GMT) on Thursday.

• US Treasury Secretary Scott Bessent warned nations not to impose countermeasures, saying on Fox News: “If you retaliate, there will be escalation.”

• Leaders around the world criticised the tariffs, with Australian prime minister Anthony Albanese calling them “totally unwarranted” and his Italian counterpart, Giorgia Meloni, a close Trump ally, saying they were “wrong”.