UK markets have fallen sharply again on opening, following the trend of Asian stocks overnight. But Donald Trump has insisted the trade war is “medicine” for the US economy. Listen to Trump 100 as you scroll.
Monday 7 April 2025 08:09, UK
By Sarah Taaffe-Maguire, business and economics reporter
The UK’s benchmark stock index, the FTSE 100, dropped 2.64% as it opened.
The larger FTSE 250 – made up of the 101st to 350th most valuable companies on the London Stock Exchange – shed 2.9%.
While it’s not good news and shows a lack of confidence in the companies making up the index and the UK economy, it’s no surprise after similar falls in Asian stocks.
Markets in the UK are about to open.
The FTSE 100 plummeted on Friday in its worst day of trading since the start of the COVID pandemic.
All but one stock on that index fell on Friday, with Rolls-Royce, banks and miners among those suffering the sharpest losses.
Stay with us as we bring the latest here.
Downing Street is “disappointed” by Donald Trump’s tariffs, a minister has just told us.
But Heidi Alexander added caution.
“What we need to do at this point in time is to have cool heads,” she told our presenter Wilfred Frost.
“We are obviously working through our negotiations with the US in terms of a wider trade agreement, but it’s in nobody’s best interests for there to be an escalating trade war where tariffs are constantly being ratcheted up.”
We just reported in the post below that another investment bank thinks a recession in the US is more likely than before – but is the world facing a global recession?
Alexander admits they are “bad news for the global economy”.
“That is why we have to do everything that we can to protect the interests of the British people and British businesses,” she said.
“And that is why we are setting out a package of support today for the car industry to provide certainty to British manufacturers and to ensure that they can remain at the cutting edge of the transition to electric vehicles, and also make sure that consumers can benefit from the cheaper running costs of electric vehicles as well.”
The chances of a recession in the US are nearly 50-50, according to Goldman Sachs, which rates that probability at 45%.
Its previous estimate was 35% just last month, following an increase in policy uncertainty that is likely to depress capital spending by more than what the firm previously assumed.
Last week, JP Morgan reported it reckons the chances of a US and global recession are 60%.
Europe has treated the US “very badly”, Donald Trump has said several times since beginning his second term in the White House.
He said it again overnight, this time taking aim at the EU’s trade surplus with the US.
“We take their cars, Mercedes, Volkswagen, BMW… we take millions of cars, they take no cars,” he said aboard Air Force One.
“They don’t take our farm product, they don’t take anything. Europe’s treated us very badly. We put a big tariff on Europe.”
Trump added the EU is “coming to the table”, and “wants to talk”, but said any agreement would have conditions.
“There’s no talk unless they pay us a lot of money on a yearly basis,” he added.
“Number one – for present, but also for past, because they’ve taken a lot of our wealth away, and we’re not going to allow it to happen.”
On Wednesday, the EU is set to be hit with a 20% tariff.
By Helen-Ann Smith, Asia correspondent
China’s announcement of its tariff retaliation came late afternoon on Friday local time.
Most Asian markets closed shortly after – and markets in China, Hong Kong and Taiwan were closed for a public holiday – meaning the scale of the hit did not play out until today.
This morning we are getting a sense of the impact.
Dramatic falls across all Asian markets clearly signal a realisation a global trade war is no longer just a threat, but a reality here to stay, and a global recession could yet follow.
Up until Friday, China’s response to Donald Trump’s tariffs had been perceived as restrained and designed to avoid escalation – the markets had reacted accordingly.
A global impact
But that all changed last week when Trump’s new 34% levy on all Chinese goods was matched by China with an identical tax.
Both sit on top of previous tariffs levied, meaning many goods now face rates in excess of 50%.
These are numbers that make most trade between the world’s two biggest economies almost impossible, and that will have a global impact.
China has clearly decided any forthcoming pain will have to be managed, and not being seen to be cowed and bullied by Trump is deemed more important.
A growing queue
But the scale of the retaliation will have further spooked the markets as it makes the prospect of negotiation and retreat increasingly unlikely.
Trump added to the atmosphere of intransigence when he told the media yesterday the trade deficit with China would need to be addressed before any deal could be done.
The complete lack of concern from the White House over the weekend will also not have helped.
While smaller economies like Japan, South Korea, Cambodia and Vietnam are all lining up to attempt to negotiate, there are a lot of nations in that queue.
There is a sense none of this will be easily rectified.
Despite more dramatic losses in markets overnight – this time in far-east Asia – Donald Trump has insisted he won’t budge.
For a quick look at what happened since yesterday:
But the tariffs won’t be lifted, Trump said aboard Air Force One, unless foreign governments pay “a lot of money”.
“I don’t want anything to go down, but sometimes you have to take medicine to fix something,” he said.
He also said he’s spoken to leaders from Europe and Asia over the weekend, all hoping to convince him to lower further “reciprocal” tariffs, which are due to come into effect on Wednesday.
“I spoke to a lot of leaders, European, Asian, from all over the world,” he added.
“They’re dying to make a deal. And I said, we’re not going to have deficits with your country.
“We’re not going to do that because to me, a deficit is a loss. We’re going to have surpluses or, at worst, going to be breaking even.”
Trump, who spent much of the weekend playing golf in Florida, posted on his Truth Social platform: “WE WILL WIN. HANG TOUGH, it won’t be easy.”
Bill Ackman, who endorsed Donald Trump’s run for president, said the president is losing the confidence of business leaders – and should pause his trade war.
In a lengthy post on social media, the billionaire fund manager wrote: “The president has an opportunity to call a 90-day time out.”
That’s to give time to resolve any trade issues through negotiation.
“If, on the other hand… we launch economic nuclear war on every country in the world, business investment will grind to a halt,” he added.
“Consumers will close their wallets and pocket books, and we will severely damage our reputation with the rest of the world that will take years and potentially decades to rehabilitate.”
Welcome back to our live coverage as the global fallout continues following Donald Trump’s tariffs reveal.
Trump’s unilateral 10% tariff on all imports from many countries – including the UK – kicked in on Saturday.
The higher rates for what he deems to be the “worst offenders” are due to take effect on Wednesday.
Since his announcement last Wednesday evening, the markets have been in turmoil but the president has insisted the US must “hang tough”.
We’ll have the latest developments as markets in the UK and Europe open in just a few hours, with all the reaction in between.
We’re pausing our live coverage of developments surrounding Donald Trump’s new tariffs. Thanks for following our posts today.
Scroll down to catch up on the news as it happened and read below for a summary…
Sir Keir Starmer has announced new measures which he says will help the UK’s car industry in the wake of the US tariffs.
It came after the prime minister today held a series of calls with world leaders, including Canadian Prime Minister Mark Carney and German Chancellor Olaf Scholz, to discuss the trade crisis.
Meanwhile, investors are anxiously waiting for stock markets to open on Monday following last week’s dramatic drops. Many have predicted that share price falls will continue.
But Kevin Hassett, the director of the US’s National Economic Council, suggested there may be room for manoeuvre as more than 50 countries had been in touch asking for trade talks.
A snap poll by the British Chambers of Commerce has found that most British firms with some form of exposure to US trade expect to be negatively affected by the new levies.
Almost a third of those affected also said they were likely to increase their prices as a result.
Be the first to get Breaking News
Install the Sky News app for free