Downing Street has admitted the UK is now likely to face Donald Trump’s tariffs this week as the US president’s threats of a global trade war sparked fears of a global recession.
Markets tumbled across the UK, Europe and Asia on Monday after Mr Trump announced he is set to impose a barrage of high tariffs on imported goods from around the world on his self-described “Liberation Day” on Wednesday.
No 10’s admission on Monday marked a blow for Sir Keir Starmer’s government as the UK had been hoping to secure a “UK-US economic prosperity deal”, which would exempt British goods from tariffs on imports into America.
But asked whether the government had given up hope of a deal being signed before Wednesday, the prime minister’s official spokesman said that he is “not going to put a time frame on those discussions” but that they are “likely to continue beyond Wednesday”.
London’s FTSE 100 was down by more than 1 per cent on Monday, and around 100 points were shaved off the index during the morning’s trading.
Trump’s tariffs will have ‘drag on global activity’
Many economists believe that trade tensions sparked by Mr Trump will slow economic growth around the world.
The Organisation for Economic Co-operation and Development (OECD) said earlier this month that US trade policy would be a “drag on global activity” and hit living standards around the world.
“Overall, consumers face much of the burden of higher tariffs,” the OECD said in its economic outlook report, with real disposable incomes estimated to decline by 1,600 US dollars (£1,237) per household in the US.
In terms of the UK impact, experts say there is a great amount of uncertainty about how tariffs will filter through to households and businesses, especially if the country avoids steep penalties.
Economists at the Bank of England said the effect on inflation in the UK would depend on how other countries respond with their own trade policies, and how foreign exchange rates are affected.
Economist Swati Dhingra, a member of the Bank’s Monetary Policy Committee, has said the UK is sensitive to changing import prices.
But she suggested that the inflation impact could be “less than feared” because the main goods that the US imports from the UK, including refined oil, were unlikely to see cost increases on account of tariffs.
The Bank, which sets UK interest rates, said it was a “rapidly evolving situation” that it was monitoring closely.
Full report | US stock market spooked by Trump’s reciprocal tariffs on all countries this week
Starmer facing ‘impossible task’ of potential retaliation to Trump tariffs, says expert
Sir Keir Starmer is facing an “impossible task” in deciding whether to retaliate to Trump’s looming tariffs, an expert has warned.
Simon Finkelstein, director of geopolitics at the Brunswick Group said “It would be foolish to do so, however, politically it might become untenable not to do so.”
“Fundamentally he’s got an impossible task because the people who work for the President clearly don’t know what he’s going to do on Wednesday either,” he told Times Radio.
“But I think the thing [Starmer] has got to do is continue on the same strategy, which is attempt to negotiate some sort of future deal with the US, whether that looks like something sort of wider range or more limited on technology to mitigate the worst aspects of the tariffs.”
“The UK government has to at least try,” Mr Finkelstein added.
Pictured | Starmer welcomes the President of Finland to Downing Street for bilateral talks
Trump tariff fears send markets tumbling as investors seek safety in gold
Financial markets are facing a wave of uncertainty as investors brace for the fallout from Donald Trump’s latest tariff threats.
London-listed stocks are expected to suffer, with the FTSE 100 set for a turbulent start to the week.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, warned that “the last day of March is spring-loaded with uncertainty” as concerns over sweeping tariffs send markets into turmoil.
Asian indices have already seen sharp declines after hopes for a more targeted approach to duties faded.
Over the weekend, Mr Trump signalled that broad new tariffs would take effect on Wednesday —dubbed ‘Liberation Day’ — raising fears of a global trade war.
“He appears determined to target countries across a range of sectors,” Ms Streeter said, but warned that reviving domestic industries would take years and lead to higher costs in the meantime.
The uncertainty has fuelled recession fears in the US, further unsettling markets.
With inflation already running hot, expectations of US interest rate cuts are fading.
Meanwhile, gold has surged above $3,100 as investors seek safe havens.
“The gold rush has sparked a rush of interest from individual investors,” Ms Streeter noted, as buyers snap up gold amid fears of further economic instability.
Owner of Aston Martin increases backing amid Trump tariff turmoil
The billionaire owner of Luxury car manufacturer Aston Martin has announced he will increase his share in the company as it faces huge losses from Donald Trump’s tariffs.
Executive chairman Lawrence Stroll said his consortium, Yew Tree, had increased its holding in the company from 27.7 per cent to around 33 per cent.
Yew Tree has acquired 75 million new shares, raising around £52.5million for Aston Martin.
On behalf of the Yew Tree Consortium, Mr Stroll said: “I am pleased to clearly demonstrate my unwavering support and commitment to Aston Martin.”
“Now five years into Aston Martin’s transformation, I remain highly confident about the company’s medium-term prospects having re-positioned the Company as one of the most desirable ultra-luxury high performance automotive brands,” he added.
“The coming years will be pivotal in realising our vision and ambition.”
According to Bank of America, Aston is the most exposed luxury vehicle manufacturer, with almost 29 per cent of its sales happening in the United States.
Following the announcement, shares of Aston rose 6.8 per cent, putting them at the top of the FTSE 250. So far this year, they have dropped 35 per cent.
Charted | FTSE 100 tumbles amid Trump tariff war
Recap | Looming Trump tariff deadline sparks fresh fears of higher costs worldwide
UK and European stocks dropped on Monday and global markets wobbled as Donald Trump’s tariff deadline looms.
The US president promised a “Liberation Day” on Wednesday, when a series of tariffs tailored to each of the country’s trading partners will come into effect.
London’s FTSE 100 was down by more than 1 per cent on Monday, and about 100 points were shaved off the index during the morning’s trading.
Germany’s Dax and France’s Cac 40 were also falling by more than 1.7 per cent.
It follows a bruising session on Friday in New York, where its top indices, the S&P 500 and Dow Jones, tumbled 2 per cent and 1.7 per cent respectively.
Mr Trump’s tariff policy has sent ripples through the financial markets as investors assess what the impact will be on global trade.
It has also driven sharp drops in share prices on Wall Street, as worries grow that US households and businesses will slow spending, in response to higher costs for those that rely on imports.
Lib Dems urge government to be ‘tough’ with Trump
Donald Trump is “not a reliable guy for trade deals”, Sir Ed Davey said, as he urged the government not to rely on him to stick to any agreement.
Sir Ed told reporters at a local election campaign launch event in Oxfordshire: “If we can do a deal with Trump, well, fine. The question you’ve got to ask yourself is do you believe he’ll stick with it?
“He’s not a reliable ally. The evidence is overwhelming.
“He signed a deal with Canada when he was last president and he’s reneged on that, he even said it was a crazy deal, who would sign it? Forgetting that he signed it.
“This is not a reliable guy for trade deals.”
The Liberal Democrat leader added the government must be “tough” with Mr Trump.
Repeating his call for the government to impose tariffs on Tesla vehicles, Sir Ed said: “I haven’t read the whole of it because it was so awful, but he’s written a book called The Art Of The Deal. I got mine second-hand, I’d like to say, I don’t want to put money in his pocket.
“But in the Art Of The Deal he talks about if the other guy looks desperate or weak, he’s going to walk all over you. So I think if you’re dealing with Donald Trump you’ve got to realise who you’re dealing with.
“He’s not an ordinary American president where we can be friends and trust and have that great relationship we’ve had with so many American presidents, of all political parties, Republicans and Democrats.
“He’s not that sort of person. I think we’ve got to be tough with him.”
Analysis | Tariff admission is blow to Starmer’s charm offensive on Trump
The Independent’s political correspondent Archie Mitchell writes:
Since September, Sir Keir Starmer has had one mission above all else on the world stage: to keep Donald Trump onside.
The prime minister knows Washington is key to bringing about a sustainable end to the war in Ukraine, but under Mr Trump, the US is also key for his mission to get the economy back on track.
And with Mr Trump threatening tariffs left, right and centre, Sir Keir bent over backwards to try to curry favour with the commander in chief.
The PM hand-delivered Mr Trump an invitation from the King for an unprecedented second state visit, while refusing to condemn almost anything Mr Trump and his outriders Elon Musk and JD Vance said against the UK and Europe on the world stage.
But, with Mr Trump’s “liberation day” looming, Downing Street has admitted Sir Keir’s efforts have failed, and tariffs will rock our already ailing economy.
Government sources stressed on Monday that talks to secure a carve-out for Britain will not conclude before the raft of trade taxes are rolled out this week, while the prime minister’s official spokesman said you would “expect the UK to be impacted by” the levies.
Days after a spring statement which saw Rachel Reeves barely rebuild the government’s fiscal headroom, with the official spending watchdog warning a trade war could blow it to smithereens, Sir Keir looks once again to be facing a crisis.
