Time for a recap.

Global financial markets are on edge as investors await Donald Trump’s widely-trailed announcement on new tariffs on America’s trading partners.

White House aides have reportedly drafted plans for 20% tariffs on most goods imported to the United States, which would have a significant negative impact on global trade.

A new report has shown that if Trump imposed 25% tariffs, triggering retaliatory action, up to $1.4rn could cause a $1.4tn hit to the world economy.

Jun Du, a professor of economics at Aston University who co-wrote the report, said this would have similar effects to the 1930 trade war that deepened the Great Depression.

“These findings align with historical precedents like the Smoot-Hawley tariffs and modern trade conflicts, illustrating how protectionism erodes competitiveness, disrupts supply chains, and imposes disproportionate costs on consumers.”

The UK government is expecting to be hit by new tariffs tomorrow. Business secretary Jonathan Reynolds told the BBC:

“It appears tomorrow there’ll be no country in the world exempt from the initial announcements”.

Reynolds has also denied that the issue of free speech has featured in tariff negotiations:

The UK is also hoping that it can reach a deal with the US eventually to avoid Trump’s new tariffs.

But even if that happens, Britain’s economy could still be hit by the shockwaves of a global trade war. Goldman Sachs has trimmed its forecast for UK growth this year and in 2026.

The head of the European Commission, Ursula von der Leyen, has said the EU has a “strong plan” to retaliate against tariffs imposed by Donald Trump but would prefer to negotiate.

Europe’s financal markets have closed higher tonight…

…while gold hit a record high in early trading.

Uncertainty over tariffs has hit factory output in the UK, new data shows, and in the US.

Across Europe, stock market trading has ended for the day, with shares higher as investors await tomorrow’s announcement from Donald Trump on tariffs.

In London, the FTSE 100 share index has closed 52 points higher at 8634 points, up 0.6% today.

Germany’s DAX was up almost 1.7% at the closing bell, while Frances’s CAC was 1% higher.

Traders are weighing up whether this is a buy the dip opportunity or part of a longer standing period of uncertainty that will weigh on stocks, reports Joshua Mahony, analyst at Scope Markets.

Mahony adds:

While countries such as the UK might stand in a good position to strike a deal, there is a risk that tomorrow marks the beginning of a tit-for-tat trade war that brings yet more uncertainty and concern for markets. The expected retaliation from Canada, the eurozone, China, Japan, and Korea does signal that it could get worse before it gets better.

The slowdown in production at American factories last month (see earlier post) shows that tariffs are failing to give US manufacturing a lift, reports ING.

They told clients:

Today’s US data are in general softer than hoped. The ISM manufacturing index for March dropped to 49.0 from 50.3, lower than the 49.5 consensus and back in contraction territory. This is broadly in line with regional manufacturing indicators released in recent days.

The details show big drops in employment (44.7 from 47.6) and new orders (45.2 from 48.6) with production down at 48.3 versus 50.7. Remember 50 is the break-even level so anything above is expansion and the further below 50 the deeper the downturn.

This suggests that tariff fears (impact on supply chains and potential reciprocal action from foreign trading partners) are hurting the sector right now. Note too the big rise in prices paid to 69.4 from 62.4, which suggests pre-emptive moves ahead of the imposition of tariffs with the threat of higher prices for consumers looking very real. Below is a chart of manufacturing production growth (YoY%) versus the ISM production index.

This underscores how the stagnation in the sector over recent years looks set to continue despite tariffs supposedly being a tool to reinvigorate manufacturing.

Production at US factories declined last month as order book growth slowed due to tariff uncertainty, new data shows.

The latest healthcheck on American manufacturing shows that growth stalled in March. with production falling and order books only expanding modestly.

S&P Global’s poll of purchasing managers also found that confidence in the outlook for business activity “softened”, amid “some uncertainty over the impact of federal government policies”.

This pulled S&P Global’s US Manufacturing PMI down to 50.2 in March, down from 52.7 in February, only just above the level showing stagnation.

Manufacturers are worried that trade tensions will lead to lower orders, explainsChris Williamson, chief business economist at S&P Global Market Intelligence:

“The strong start to the year for US manufacturers has faltered in March. A combination of improved optimism surrounding the new administration and the need to front-run tariffs had buoyed the goods-producing sector in the first two months of the year, but cracks are now starting to appear. Production fell for the first time in three months in March, and order books are becoming increasingly depleted.

While business confidence about the outlook remains relatively elevated by standards seen over the past three years, this is based on companies hoping that the nearterm disruption caused by tariffs and other policies will be superseded as longer-term benefits from the policies of the new administration accrue. However, March has seen more producers question this belief. Business optimism about the year ahead has deteriorated further from January’s near threeyear high, and has dropped sharply over the past two months, causing firms to stop raising payroll counts for the first time since October.

A key concern among manufacturers is the degree to which heightened uncertainty resulting from government policy changes, notably in relation to tariffs, causes customers to cancel or delay spending, and the extent to which costs are rising and supply chains deteriorating in this environment. Tariffs were the most cited cause of factory input costs rising in March, and at a rate not seen since mid-2022 during the pandemic-related supply shock. Supply chains are also suffering to a degree not seen since October 2022 as delivery delays become more widespread.

Over in New York, shares have fallen at the start of trading.

After a late rally yesterday, the Dow Jones Industrial average has dropped by 0.6% or 261 points today to 41,740 points.

The S&P 500, which also finished yesterday’s volatile session higher, is down 0.4%.

Traders will be digesting today’s report that the White House is preparing new 20% tariffs on most imports to the US, for Donald Trump to announce on Wednesday.

Fawad Razaqzada, market analyst at City Index and FOREX.com, reports that market sentiment remains fragile ahead of “Liberation Day” (as Trump dubs it) tomorrow.

All eyes are on Trump’s next move—a sweeping set of new tariffs, set to be unveiled on Wednesday, which he has proudly dubbed “Liberation Day.”

The premise? That hiking tariffs will boost domestic industry and create jobs.

The reality? Investors fear it could stoke inflation while simultaneously weighing on economic growth—a toxic mix for an already shaky market.

Donald Trump doubled his wealth last year, Forbes reports, partly thanks to his dabbling in crypto.

Forbes’s latest Annual Billionaires List shows that Elon Musk is the world’s richest person again, having overtaken French luxury goods titan Bernard Arnault.

Musk’s net worth grew by 75% in 2024 to an estimated $342bn, due to higher valuations of xAI and SpaceX, and a 12-month rise in Tesla stock, despite the recent selloff.

Musk is the first person to reach the $300 billion mark.

President Donald Trump more than doubled his net worth to an estimated $5.1bn, thanks to his shares of Trump Media & Technology Group and “big cash inflows from his recent crypto ventures”, such as the $Trump meme coin launched earlier this.

Here are more highlights from the report, via Forbes:

• Newcomers: The 2025 ranking features 288 newcomers, including musician Bruce Springsteen, Chipotle founder Steve Ells, Alphabet/Google CEO Sundar Pichai, actor and former CA governor Arnold Schwarzenegger and Scale AI cofounder Alexandr Wang, the youngest self-made billionaire in the world, at age 28.

• Globally: The United States has more billionaires than any other country, now boasting a record 902 on the list, worth a combined $6.75 trillion. China follows, with 450 billionaires, while India comes in third, with 205.

• The $100 Billion Club: A record 15 people worldwide now have 12-figure fortunes, up from 14 last year and zero in 2017. This elite group is worth $2.4 trillion in all, meaning just 0.5% of the world’s 3,028 billionaires hold approximately 15% of all billionaire wealth.

• Drop-offs: 107 people dropped off the list this year, including Hermès heir Nicolas Puech and Hobby Lobby’s David Green, among others. An additional 32 billionaires died.

OBR chair Richard Hughes is not the only one concerned about the work of the Office for National Statistics (ONS). The cabinet office has launched an independent inquiry into the Newport-based number-crunchers, underlining the concern in government about the reliability of its data.

Chaired by former DWP permanent secretary, Sir Robert Devereux, the review will report by the summer. Its findings will be handed to cabinet office permanent secretary, Cat Little, and another Sir Robert (Chote, in this case), chair of the UK Statistics Authority.

A Cabinet Office spokesperson said:

“in light of some specific concerns, the UK Statistics Authority and the Cabinet Office are commissioning an independent review into the ONS and how we can best support its staff and the timeliness and accuracy of the UK’s official statistics.”

Goldman Sachs have cut their forecast for UK growth this year, due to the economic damage that new US tariffs will cause, even if Britain ultimately avoids them.

In a new research note today, Goldman say they assume that the US does impose duties on critical goods imports from the UK, but also that the UK ultimately avoids reciprocal tariffs given the balanced trade between the two countries (which could happen if a trade deal is agreed).

Even so, though, Goldman have trimmed 0.1 percentage point off their forecast for UK growth this year, and in 2026, saying:

However, our updated global baseline now assumes notably larger US tariffs on other economies including the EU. We have consequently downgraded our 2025 growth forecasts for both the US and the Euro area, implying greater spillovers to the UK.

As such, we now see a larger total hit to UK GDP from trade tensions even if the UK does avoid a reciprocal tariff. We therefore lower our UK growth forecast for 2025 to 0.8% (from 0.9%) and for 2026 to 1.2% (from 1.3%).

White House aides have drafted a proposal to impose tariffs of around 20% on most imports to the United States, the Washington Post is reporting.

U.S. President Donald Trump’s team is mulling using trillions of dollars in new import revenue for a tax dividend or refund, the report said, citing sources.

Bank of England interest rate setter Megan Greene has warned that the US dollar’s status as the global reserve currency could be hurt by trade war uncertainty.

Greene said she thought a trade war involving retaliatory tariffs would probably be disinflationary for Britain’s economy.

Exchange rates were likely to be a key way the effect of trade wars would be transmitted across economies, Greene explained, adding:

“It’s also possible that the dollar’s role as a global reserve currency could be undermined a little bit by all of the uncertainty that we’re seeing, and so we don’t know how the exchange rate will behave.”

The EU will react strongly to any reciprocal tariffs the US may impose on its exports, Ursula von der Leyen, European Commission president has warned.

Von der Leyen says in a speech on Tuesday:

“Europe has not started this confrontation. We do not necessarily want to retaliate, but we have a strong plan to retaliate if necessary.

Our objective is a negotiated solution. But of course, if need be, we will protect our interests, our people, and our companies.”

“Our objective is a negotiated solution. But of course, if need be, we will protect our interests, our people and our companies. I want to be very clear on the aim of our response. We think that this confrontation is in no one’s interest. The flow of goods and services between us is nearly balanced. We are willing to work on the trade balance of goods as well as services.

This is the largest and most prosperous trade relation worldwide. We would all be better off if we could find a constructive solution.”

Over at parliament, Richard Hughes has told MPs that he has let the chancellor know that he would like to serve a second five year term as chair of the Office of Budget Responsibility.

Appearing before MPs on the cross-party Treasury select committee to discuss last week’s spring statement, Hughes was asked whether he would like to stay in the post, after his first term ends on 3 October.

He replied:

“I have written to the chancellor, to the effect that I would be interested in serving a second and final term, earlier this year.”

Asked whether he had heard back from Rachel Reeves, he said he hadn’t, but added:

“I appreciate that the chancellor has a lot on her plate at the moment”.

The OBR’s role in economic policymaking has come under intense scrutiny in recent weeks, as Reeves implemented spending cuts to ensure she is on course to meet her fiscal rules - including £500m of last minute welfare reforms, after the OBR rejected the government’s costing of its plans.

Hughes also sought to reassure committee chair Meg Hillier that he did not believe leaks of aspects of the forecast before the spring statement had come from within the OBR. “I am satisfied that the OBR is not the source,” he said, adding that the Treasury had commenced its own leak inquiry.

Rates for shipping containers from China to the United States are rising ahead of “tariff day” according to new figures from shipping analytics firm Xeneta.

The cost of shipping goods to the east coast of the US is up by 9% ($322 for a forty-foot equivalent unit (FEU), a standard shipping container), while it has jumped 16% to the west coast of the US to $383/FEU, Xeneta data shows.

“We live in a volatile market so, while the general direction of travel has been downward for spot rates from the Far East to the US since 1 January, we should expect some bumps in the road,” said Peter Sand, chief analyst at Xeneta.

Average spot rates on container ship journeys from the Far East to the US are expected to increase by $300 - $600 per FEU as a result of General Rate Increases (GRI) by shipping firms. A GRI is the amount by which ocean carriers increase their base rate on certain trade routes, usually to cover rising operating costs and to make sure that shippers remain profitable on certain routes.

Sand added:

“Carriers will chance their arm and push GRIs during times of heightened uncertainty. Nervousness in the market means they can have some success too, even if it seems to defy the underlying balance of supply and demand.”

Ireland could lose half its pharmaceutical sales to the US if tariffs of 20% are imposed by Donald Trump on exports from the EU, the government will be told today.

It would leave a €29bn gap in the economy, my colleague Lisa O’Carroll reports from Dublin.

“We don’t want to be in that space,” said Simon Harris, the deputy prime minister, as he arrived for a cabinet meeting this morning.

Harris added:

“Over a five year period, if the EU imposed a tariff of around 20% and the US imposed a tariff around 20% you could, over a five year period see a very significant reduction up to around half in the amount of pharmaceutical products we’re exporting.”

Ireland is seen as particularly exposed to Trump’s attempt at shock therapy after its huge pharmaceutical sector was singled out as a target in his efforts to repatriate jobs and tax.

Pharma and medical devices manufacturing are the backbone of US investment in Ireland, responsible for €58bn of the country’s €72bn exports to the US in 2024.

Pfizer, Amgen, Johnson & Johnson, Merck Sharp and Dohme, Abbvie and Bristol Myers Squibb are among the owners of 90 pharma plants in Ireland.

Harris said a trade war was “regrettable” and would fundamentally alter the EU and US relationship.

A full-blown trade war between the US and its trading partners could cost $1.4tn, a new report shows.

Economists at Aston Business School have modelled a range of potential scenarios, including the possibility that America it hit by full global retaliation after it announces new tariffs against other countries.

That full-scale trade conflict could result in a $1.4 trillion global welfare loss, Aston has calculated.

The report explains that tariff escalation leads to higher prices, reduced competitiveness, and fragmented supply chains, as we saw in 2018 in the US-China trade war.

It says:

Donald Trump’s 2025 return to power has unleashed a gale of protectionism, reshaping global trade within weeks.

They outline six scenarios, from the first wave of tariffs already announced against Canada, Mexico and China to a full-blown trade war.

Here are the key findings:

1. US initial tariffs: US prices rise 2.7% and real GPD per capita declines 0.9%. Welfare declines in Canada by 3.2% and Mexico by 5%.

2. Retaliation by Canada, Mexico and China: US loss deepens to 1.1%, welfare declines in Canada by 5.1% and Mexico by 7.1%.

3. US imposes 25% tariffs on EU goods: Sharp transatlantic trade contraction, EU production disruptions, US welfare declines 1.5%.

4. EU retaliates with 25% tariff on US goods: Prices rise across US and EU, mutual welfare losses and intensified negative outcomes for the US. UK experiences modest trade diversion benefits.

5. US global tariff: Severe global trade contraction and substantial price hikes substantially affect North American welfare and UK trade volumes.

6. Full global retaliation with reciprocal tariffs: Extensive global disruption and reduced trade flows, severe US welfare losses, $1.4 trillion global welfare loss projected.

The full-blown trade war (scenario 6) would have “profound implications” for interconnected economies like the UK.

The report says:

As a trade-dependent nation navigating post-Brexit realities, the UK stands at a crossroads. Trump’s tariffs disrupt supply chains and exports, yet might open doors for rerouting, with high potential for exporting much more to the U.S.

The dual-edged impacts are stark: fleeting export gains collide with vulnerabilities in critical sectors like automotive and tech, while EU divergence risks, amplified by regulatory misalignment and political distrust, threaten its efforts in resetting the UK-EU relationship.

So while the UK can use its post-Brexit flexibility to mitigate risks and leverage new trade routes, sustained gains depend on rebuilding EU ties and supporting a rules-based international trade order, they add.

Ouch: UK manufacturing production contracted at a faster pace in March, as new orders declined at the sharpest rate for 19 months, new data shows.

The latest healthcheck on Britain’s factories shows March was a rough month. Output and new orders fell at a faster rate, as business confidence slumped to its lowest in nearly two and a half years.

Concerns about government policy, rising costs, increased geopolitical tensions and potential tariff uncertainty are all hurting, the survey of purchasing managers shows.

Fears of tariffs may also have hurt demand: new export business contracted for the thirty-eighth successive month in March, and at the quickest pace since August 2023.

Rob Dobson, director at S&P Global Market Intelligence, says:

“March proved to be another tough month for UK manufacturers.

Output contracted at the quickest pace since October 2023, as new business growth fell at the steepest rate for one-and-a-half years, suffering one of its sharpest falls since the pandemic lockdown of 2020. “Companies are being hit on several fronts. Many reported that domestic market conditions are deteriorating, costs are rising due to changes in the national minimum wage and national insurance contributions, geopolitical tensions are intensifying, and global trade faces potential disruptions from tariffs.

Although the impact on production volumes was widespread across industry, it was again small manufacturers that took the hardest knock.

The outlook is also darkening, with overall business optimism plunging to its lowest levels since late-2022. Fears about current and future performance put manufacturers on an increasingly cost cautious footing, with employment, stock holdings and purchasing all falling as companies looked to work leaner and protect cash flow, margins and competitiveness. Many firms are clearly hunkering down as they expect difficulties to continue in the coming months

Encouraging news: eurozone factory output has risen for first time in two years.

The latest poll of purchasing managers across Eropean factories shows that output rose, narrowly, in March, and at the fastest rate in almost three years.

That could be a sign that demand picked-up as customers tried to avoid new US tariffs, although new orders did continue to fall, at a slower rate.

Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, says:

“Things are looking up. The PMI has increased for the third month in a row and the output index even surpassed the threshold for growth. A significant part of this movement may have to do with the frontloading of orders from the U.S. ahead of the tariffs, which means some backlash is to be expected in the coming months.

However, given the geopolitical developments, there is also increasing speculation that the defense sector will expand significantly over the next few years, with direct and indirect positive effects on the industry.

Keir Starmer has said this morning that talks with the US on a trade deal with the US are “well advanced”.

The UK PM told Sky News that progress was being made towards a deal that would help Britain avoid nnew US tariffs, saying:

“We are discussing economic deals.

“These would normally take months or years, and in a matter of weeks, we’ve got well advanced in those discussions.”

Update: Steven Swinford of The Times reports that the deal is ‘ready to sign’, but the US won’t want to put pen to paper until Trump has announced his new tariffs.

[that would allow both sides to claim a success when the signing occurs].

Swinford also reports that the UK has agreed to drop the Digital Services Tax, which is levied on US tech firms, and promised a ‘light-touch’ approach to AI regulation.

In a worrying sign, corporate distress across Europe has hit its highest level in six months.

The latest Weil European Distress Index (WEDI) shows there were paticularly sharp increases in companies hitting trouble in Germany and the UK in February

The report shows:

• Retail & Consumer Goods: Corporate distress in this sector has surged to its highest level since October 2014, spurred by global uncertainty, fears of an economic slowdown, and cost-of-living pressures. This has resulted in poor investment and liquidity metrics, with profitability declining sharply across the sector.

• Industrials: Distress in the industrial sector has hit its highest level since October 2020, driven by investment pressures and falling global demand, particularly in Germany’s export-driven economy. Elevated capital costs have compounded the strain.

• Germany: Distress in Germany has reached its highest level since July 2020, driven by weak investment, poor profitability, falling valuations, and a sharp downturn in exports, manufacturing, and domestic consumption. The downturn in 2025 has been sharper than initially expected.

• UK: Corporate distress in the UK has risen to its highest level since September 2023, driven by growing economic uncertainty, tighter liquidity, and concerns over investment following changes to National Insurance and the National Living Wage.

Shares are pushing higher across Europe, a day after trade war fears triggered some heavy falls.

In London, the FTSE 100 share index is up 53 points, or 0.6%, at 8636, rising from a two-week low.

Germany’s DAX has gained 1%, while France’s CAC index is up 0.8%.

Kathleen Brooks, research director at XTB, says:

What a difference a day makes, European stocks have bounced at the start of the new quarter and indices are a sea of green. The Eurotosxx 600 index is higher by 1%, eroding some of Monday’s losses.

Brooks warns, though, that markets remain ‘jittery’,

The focus is on the US reciprocal tariff announcement that is due tomorrow. At this stage, hopes are that a recovery rally could take hold if Trump’s tariff announcements are seen as the final move from the White House in its trade war, and if the new levies are reasonably easy to comply with.

The downside risk for stocks could emerge once more if Trump suggests that even more tariffs could be coming down the line or if there is a lack of clarity about reciprocal tariffs in the announcement.

Markets are hoping for a clean decision, that allows traders to move on from tariffs.

UK business secretary Jonathan Reynolds has predicted that “every country in the world will be affected” by Donald Trump’s decision on tariffs tomorrow.

Speaking to BBC Breakfast, Reynolds explained that:

“It appears tomorrow there’ll be no country in the world exempt from the initial announcements”.

However, there will then be the potential to reach an agreement with the US on a “better way forward”, he suggested.

Reynolds admits that “ideally” the UK would have been exempt from these new tariffs, given the work that has been done with the US to try to achieve a carve-up.

He argues that tariffs are unnecessary:

I tihnk that our trading relatinship is a very strong, and fair and balanced one, so I don’t think there is the need to do this.

[both the US and UK’s trade data suggests they run a surpus with the other country]

Reynolds is hopeful that the UK and US can reach an agreement that avoids tariffs on each other and also strengthens their trade relationship., giving UK businesses more access to the US markets.

Rachel Reeves has been urged to fund 40,000 new engineers to boost the UK economy by allocating the £1.4bn the government already collects from employers for apprenticeships but does not spend.

The independent Industrial Strategy Skills Commission, led by Tom Watson, the former Labour deputy leader, and ex-Conservative skills minister Robert Halfon, said billions of pounds was being raked in from businesses that was supposed to fund apprenticeships.

However, about £800m per year being raised for the exchequer from the apprenticeship levy, which is being revamped by Labour as the “growth and skills levy” is not currently allocated to the English apprenticeship budget.

A further £650m from an immigration skills charge – a fee paid by employers sponsoring an overseas worker, to fund training of the domestic workforce – is also not being spent.

In an intervention ahead of the chancellor’s June spending review, when the government will outline its funding priorities for the next three years, the cross-party panel convened by the trade body Make UK said a step change in funding for apprentices was required to reboot economic growth.

It said the £1.4bn combined could fund 40,000 new engineers, going a long way to filling the 55,000 skills gap in the manufacturing sector which is currently costing the UK economy £6bn in revenue each year.

Introduced in 2017 under Theresa May, the Conservatives had planned to levy employers to help fund apprenticeships. It is paid at a rate of 0.5% on an employers’ annual wage bill for firms with a wage bill of more than £3m a year. However, apprenticeship starts have fallen by 42% since then.

Labour promised before the general election to replace it with a growth and skills levy, and is making changes to drive up apprentice numbers. However, the chancellor set the ground for a tight spending review at last month’s spring statement, which employers’ groups fear could undermine their ambitions to see more funding for apprenticeships.

Stephen Phipson, the chief executive of Make UK, said the old apprenticeship levy had been “nothing short of a disaster”.

“Government is sitting on a pot of cash that should immediately be ringfenced and spent on skills training. The first priority is properly funding courses, so colleges and training providers aren’t put off delivering higher cost courses such as engineering. There also needs to be targeted efforts to recruit experienced tutors to train up the next generation in the skills we need now and in the future.”

The UK government is hopeful that any tariffs imposed on Britain this week by Donald Trump can be reversed, if London and Washington agree a new economic deal.

Business minister Jonathan Reynolds is doing the media rounds this morning, and told Sky News on Tuesday that Britain was taking a “calm-headed approach”.

Asked if he was hopeful that a deal would lead to tariffs being dropped in weeks or months, he said:

“I am, that would be my objective.”

Reynolds also warned the longer a deal took, the more likely it would become that Britain would need to impose retaliatory tariffs.

“The longer we don’t have a potential resolution to that, the more we will have to consider our own position.

I think we have to have all options available to us. I think that’s reasonable.”

Reynolds also told Times Radio that food standards were a “red line” in trade talks.

Gold’s gains today come hot on the heels of its strongest quarter since 1986.

Bullion rose by 19.3% in the first quarter of this year, driven by fears that trade wars would hurt growth and drive up inflation.

David Meger, director of metals trading at High Ridge Futures, explained:

“The ongoing uncertainty regarding tariffs has affected equity markets and brought another round of safe-haven buying into the gold market.

“There are certain technical areas of resistance along the way that could cause a little profit-taking or pullback. But the ongoing bullish trend remains in place. The fundamental underpinnings remain in place.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The markets are clad in a fog of uncertainty as investors around the world brace for Donald Trump to unveil country-specific tariffs tomorrow.

Trump’s ‘Liberation Day’ is already being dubbed ‘Demolition Day’ by some City wags, and traders really aren’t sure quite what to expect. That uncertainty drove a sell-off across European and Asia-Pacific markets yesterday, as market participants tried to cut risk.

This morning, gold has hit a new all-time high, touching $3,148.8 per ounce, amid a nervous dash for safe assets.

Last night, Trump pledged he would be “very kind” to trading partners when he unveils further tariffs this week, which he suggested would come “tomorrow night or probably Wednesday.”

He said:

“We’re going to be very nice, relatively speaking, we’re going to be very kind.”

White House Press Secretary Karoline Leavitt told reporters yesterday that Trump will announce his reciprocal tariff plans on Wednesday during an event in the White House Rose Garden,

Leavitt declared:

“The president will be announcing a tariff plan that will roll back the unfair trade practices that have been ripping off our country for decade.

It’s time for reciprocity and it’s time for a president to take historic change to do what’s right for the American people.”

But many investors fear that whacking new trade levies on imports into the US, and risking retaliatory tariffs from America’s trading partners, will backfire on the economy.

As Tom Stevenson, Investment Director at Fidelity International, puts it:

“Investors are starting to price in the growing likelihood of a painful cocktail of recession coupled with stubbornly high inflation. What has surprised many is the extent to which the President seems prepared to take a hit to the economic prospects of the US as well as the rest of the world.

“The nature of protectionism is that it hits American businesses and consumers just as hard as those in the US’s rivals. Tariffs raise prices and curtail confidence and growth for the country levying them as much as for the apparent targets.

After an early sell-off yesterday, Wall Street rebounded off its lows to close a little higher, but still posted its worst quarter since 2022. The S&P 500 fell around 4.6% in the first quarter of this year, suggesting that some of the trade war damage has been priced in.

But quite possibly not all – if Trump does disrupt global trade badly.

Stephen Innes, managing partner at SPI Asset Management says tomorrow’s announcement will set the tone for the next phase of global market reaction. He explains”:

Meanwhile, the Trump administration appears to be in its own state of flux—scrambling behind the scenes to finalize tomorrow’s “Liberation Day” tariff rollout.

The internal tug-of-war? Whether to apply bespoke tariff rates for each trading partner (a softer, more nuanced approach) or unleash a campaign-era sledgehammer with broad-based across-the-board tariffs.

The agenda

• 8am BST: Kantar survey of UK grocery inflation

• 9.30am BST: UK manufacturing PMIs for March

• 10am BST: Eurozone inflation report for March

• 10am BST: Treasury committee to quiz Office for Budget Responsibility about the spring statement

• 2pm BST: Treasury committee to quiz top economists about the spring statement