Asian markets plunge as world reels from Trump tariff announcement – business live – The Guardian

Summary

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.”

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

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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.

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Ishiba told reporters:

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“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.”

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

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

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

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

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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%.

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

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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.

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

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Brooks explains:

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The bond market is a big winner.

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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.

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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.

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Donald Trump with a chart of reciprocal tariffs at a ‘‘Liberation Day’’ event last night”,”caption”:”President Donald Trump with a chart of reciprocal tariffs at a ‘‘Liberation Day’’ event last night”,”credit”:”Photograph: Michael Brochstein/ZUMA Press Wire/REX/Shutterstock”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

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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.

“,”elementId”:”72dfd42d-07bd-40a8-9c05-606db5633f05″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

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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.

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Deutsche Bank have crunched the numbers, and confirm:

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n

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.

n

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The BBC’s Faisal Islam has posted the formula:

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THREAD:

The so-called “reciprocal” tariff doesn’t reflect the tariffs charged elsewhere directly but essentially the size of a country’s trade surplus, which has been used as a proxy. The equation essentially is aimed at levying a fee that would get this surplus to zero. pic.twitter.com/ixft2c1RLj

— Faisal Islam (@faisalislam) April 3, 2025

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

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They draw three conclusions:

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n

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.

n

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.

n

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.

n

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bottle of whisky on the river Tay.”,”caption”:”A bottle of whisky on the river Tay.”,”credit”:”Photograph: Russell Cheyne/Reuters”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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.

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The Scotch Whisky Association said:

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“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.”

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Tavish Scott, chief executive of Salmon Scotland, said:

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“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.

n

“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.”

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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.

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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.

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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.

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

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

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n
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.

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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%.

“,”elementId”:”7973c827-3ba5-4b65-a5c6-ac0c2ace50d4″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

“,”elementId”:”650959ed-af23-466a-bcce-b43540839783″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

As Bloomberg explains:

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n

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.

n

“,”elementId”:”fabdb150-d7e4-46d1-8d3c-3ab8453e6b74″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1743665459000,”blockCreatedOnDisplay”:”03.30 EDT”,”blockLastUpdated”:1743665912000,”blockLastUpdatedDisplay”:”03.38 EDT”,”blockFirstPublished”:1743665912000,”blockFirstPublishedDisplay”:”03.38 EDT”,”blockFirstPublishedDisplayNoTimezone”:”03.38″,”title”:”Pharma’s tariff reprieve could be temporary”,”contributors”:[],”primaryDateLine”:”Thu 3 Apr 2025 05.10 EDT”,”secondaryDateLine”:”First published on Wed 2 Apr 2025 19.46 EDT”},{“id”:”67ee37778f08188975c645dc”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

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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.

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

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

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

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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%.

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

“,”elementId”:”d81f76a1-ab1f-47d8-ad81-54d461cdfb32″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“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.

n

“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.

n

“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%.

n

“,”elementId”:”e0a6c8af-8751-46a7-a806-9d04fbfff471″}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1743663918000,”blockCreatedOnDisplay”:”03.05 EDT”,”blockLastUpdated”:1743664174000,”blockLastUpdatedDisplay”:”03.09 EDT”,”blockFirstPublished”:1743664174000,”blockFirstPublishedDisplay”:”03.09 EDT”,”blockFirstPublishedDisplayNoTimezone”:”03.09″,”title”:”European markets join the rout”,”contributors”:[],”primaryDateLine”:”Thu 3 Apr 2025 05.10 EDT”,”secondaryDateLine”:”First published on Wed 2 Apr 2025 19.46 EDT”},{“id”:”67ee31518f08188975c645b6″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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.

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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.

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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%).

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

“,”elementId”:”327c1ed2-9d93-4244-aa06-323d2f1460e1″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

“,”elementId”:”439174f7-a05b-40b1-87c2-a448f3ae3622″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“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.”

n

“,”elementId”:”46bd45f7-9d09-41e0-87bc-99f5bd7dd51b”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

“,”elementId”:”64f814e8-8cca-4032-a17d-f0c936dbc014″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

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.

n

“,”elementId”:”0e9b81ec-34a1-4a74-8201-8c28a673123b”}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1743663441000,”blockCreatedOnDisplay”:”02.57 EDT”,”blockLastUpdated”:1743663908000,”blockLastUpdatedDisplay”:”03.05 EDT”,”blockFirstPublished”:1743663909000,”blockFirstPublishedDisplay”:”03.05 EDT”,”blockFirstPublishedDisplayNoTimezone”:”03.05″,”title”:”FTSE 100 tumbles at the start of trading”,”contributors”:[],”primaryDateLine”:”Thu 3 Apr 2025 05.10 EDT”,”secondaryDateLine”:”First published on Wed 2 Apr 2025 19.46 EDT”},{“id”:”67ee2b5c8f08c57a3c9c74a4″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

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n

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

n

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

n

“,”elementId”:”72a7c33c-5933-4404-b31a-02e471d1b6f7″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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”.

“,”elementId”:”e49b2f41-7700-423e-90b2-681cf64b5149″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

He added:

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n

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

n

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

n

“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.”

n

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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.

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

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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.

“,”elementId”:”76378524-e7da-45d9-b2b8-fcd93fc8f9a4″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

He said:

“,”elementId”:”b1311195-6dee-4939-af07-64a3cac71951″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

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.

n

“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.”

n

“,”elementId”:”9ffd146b-1b08-4579-a1ba-fb68e8b99ade”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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.

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

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

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

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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.”

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

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n
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.

n
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.”

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

n
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%.

n
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.

n
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.”

n
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%.

n
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.”

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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.

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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%.”

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

“,”elementId”:”2a707326-0da7-4db4-ab4b-7422588812df”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

“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.

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“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.”

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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”.

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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.

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

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n

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

n

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.

n

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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”.

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

“,”elementId”:”4572e651-8fe0-4f23-8a7d-cc5776efc854″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

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.

n

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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.

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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.

“,”elementId”:”4205aad2-b426-47ec-ba6f-0c01a855e1fe”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

“,”elementId”:”af8c1d9b-e97d-4ebf-8a6f-942cea966ecf”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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.

“,”elementId”:”af3f8c75-b058-4bfb-a0be-7f65cf848e8b”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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

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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.

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

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

“,”elementId”:”72b1263f-1d79-48d9-bcdd-51fe51656512″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

He may well be right.

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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.

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“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.

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

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

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

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n

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

n

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.

n

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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.

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“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.

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trade minister Yoji Muto.”,”caption”:”Japan’s trade minister Yoji Muto.”,”credit”:”Photograph: Xinhua/REX/Shutterstock”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

“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.

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“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.

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

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

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

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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.

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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.

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“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.”

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

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

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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.

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“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.

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“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.

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In news you didn’t know you needed:

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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.

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handout photo taken on November 21, 2012 and released on 8 October, 2024 by the Australian Antarctic Division shows a waddle of King penguins standing on the shores of Corinthian Bay in the Australian territory of Heard Island in the Southern Ocean.”,”caption”:”A handout photo taken on November 21, 2012 and released on 8 October, 2024 by the Australian Antarctic Division shows a waddle of King penguins standing on the shores of Corinthian Bay in the Australian territory of Heard Island in the Southern Ocean.”,”credit”:”Photograph: Matt Curnock/AUSTRALIAN ANTARCTIC DIVISION/AFP/Getty Images”}},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

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.

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

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Read the full story below.

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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.

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

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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.

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Prime Minister Mark Carney arrives on Parliament Hill in OttawaCanada’s Prime Minister Mark Carney speaks to reporters as he arrives on Parliament Hill to attend a meeting of the cabinet committee on Canada-U.S. relations and national security in Ottawa, Ontario, Canada, April 2, 2025. 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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.”

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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.

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

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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”.

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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.

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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.

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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.

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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.

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“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.

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n

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.

n

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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:

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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.

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“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.

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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%.

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

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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.

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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.

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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.

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

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Markets in Taiwan were closed for a holiday.

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President Donald Trump appears on a television screen at the stock market in Frankfurt, Germany.”,”caption”:”Us President Donald Trump appears on a television screen at the stock market in Frankfurt, Germany.”,”credit”:”Photograph: Michael Probst/AP”}},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

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

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

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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.

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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%.

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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.

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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.

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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).

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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.

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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.

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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.

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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:

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

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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.

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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.

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

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

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“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.

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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:

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

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“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.

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

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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%.

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

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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%.

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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%.

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

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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.

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

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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.

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“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.

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

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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.

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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.

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

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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.

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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.

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

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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.

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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.

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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:

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“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.

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“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.”

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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.

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“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.

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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.

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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.”

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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%.

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

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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.

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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.

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

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

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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.

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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”.

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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.

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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.

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

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

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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”.

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Sam Jones

The Spanish Wine Federation (FEV) has described Trump’s imposition of a 20% tariff on EU products as a “significant blow to Spanish wineries”, for whom the US is the second largest export destination, and the No 1 export destination when it comes to sparkling wines.

The FEV’s director general, José Luis Benítez, said today:

“The tariffs announced by the US are completely unjustified in the specific case of wine, considering that the current tariff gap between the tariffs applied by the EU and the US is minimal.”

Benítez warned that the measure would harm not only Spanish wine-makers but also US consumers, “who consume more wine than they produce”.

He also pointed out that the newly announced tariffs would be particularly damaging to small and medium-sized producers, which make up 99% of Spain’s wineries, as they have less capacity to diversify their exports and are more dependent on the main export markets.

The US market represents approximately 13% of Spain’s total foreign sales. In 2024, 97 million litres of wine were exported for a value of around €390m.

Japan ‘disappointed’ not to escape Trump tariffs

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.”

Bond yields fall as investors fear recession

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.

US tariff calculations raise “serious concerns about policy credibility”

President Donald Trump with a chart of reciprocal tariffs at a ‘‘Liberation Day’’ event last night Photograph: Michael Brochstein/ZUMA Press Wire/REX/Shutterstock

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.

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:

THREAD:

The so-called “reciprocal” tariff doesn’t reflect the tariffs charged elsewhere directly but essentially the size of a country’s trade surplus, which has been used as a proxy. The equation essentially is aimed at levying a fee that would get this surplus to zero. pic.twitter.com/ixft2c1RLj

— Faisal Islam (@faisalislam) April 3, 2025

“}}”>

THREAD:

The so-called “reciprocal” tariff doesn’t reflect the tariffs charged elsewhere directly but essentially the size of a country’s trade surplus, which has been used as a proxy. The equation essentially is aimed at levying a fee that would get this surplus to zero. pic.twitter.com/ixft2c1RLj

— Faisal Islam (@faisalislam) April 3, 2025

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.

Scottish whisky and salmon industries “disappointed” by Trump tariffs

Severin Carrell

A bottle of whisky on the river Tay. Photograph: Russell Cheyne/Reuters

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.”

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.

A chart showing the US effective tariff rate — Photograph: Capital Economics

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.

Israeli finance minister Bezalel Smotrich has said he is convening ministry officials to formulate a course of action to protect Israel’s economy in the wake of President Donald Trump’s decision to impose tariffs on exports.

As part of a sweeping new tariff policy, Israeli goods exports to the United States will be subject to a 17% tariff.

Smotrich said he would discuss with ministry officials, after speaking with economic leaders, how to “analyse opportunities and risks and formulate courses of action, both in relation to President Trump and his team and regarding the necessary steps to strengthen Israel’s industry”.

Pharma’s tariff reprieve could be temporary

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.

Interest rate cuts look more likely

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%.

Standard Chartered, the Asia-Pacific focused lender, are the biggest faller on the FTSE 100 this morning, down 7.5%

That reflect concerns that parts of Asia has been hit particularly hard by Trump’s new traade levies.

As ING analysts told clients:

President Trump’s punitive tariffs hit Asia, with largest levies on Vietnam and smaller textile exporters. The largest economies in the region, such as India, Japan, and South Korea, fared better.

Overall, downside risks to growth and inflation could accelerate monetary policy easing and add to depreciation pressures on currencies.

European markets join the rout

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

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Trump’s new tariffs will make equity markets ‘suffer,’ economist says, with the ‘downside risk of retaliatory tariffs around the globe’

Liberation Day: How Stock Markets Are Reacting

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%.

Asian markets plunge as world reels from Trump tariff announcement – business live – The Guardian

Bond yields fall as investors fear recession

US tariff calculations raise “serious concerns about policy credibility”

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Pharma’s tariff reprieve could be temporary

Interest rate cuts look more likely

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