The FTSE 100 fell sharply on Wednesday, dropping 2.34 per cent at the open.
The index lost 186 points to reach 7,724.29, wiping out nearly all of Tuesday’s gains.
The sharp sell-off followed the latest round of Trump’s trade measures coming into force.
The import taxes announced by the US President last week, including a 10 per cent charge on UK goods and a new 104 per cent rate on some Chinese imports, took effect from midnight Washington time – just after 5am in the UK.
In London, the FTSE 100 fell this morning, following another drop in some Asian stock markets overnight, with Japan’s Nikkei tumbling 3.93 per cent overnight.
In Europe, the fallout continued, as France’s CAC 40 fell 2.4 per cent and Germany’s DAX dropped 2.3 per cent in early trading.
FTSE 100
Investors are now bracing for further volatility as markets digest the full impact of the tariffs and weigh the potential knock-on effects for inflation, trade flows, and central bank decisions.
At a speech at the National Republican Congressional Committee dinner in Washington DC, Trump told the audience that the US is “very shortly” going to announce a “major tariff” on pharmaceuticals.
Amid the ongoing market turmoil and uncertainty about global trading relations, Chancellor Rachel Reeves has said the UK is “accelerating trade deals with the rest of the world” as she prepares to meet her Indian counterpart.
Reeves will meet Nirmala Sitharaman alongside Trade Secretary Jonathan Reynolds later on Wednesday for talks aimed at securing a deal with India.
The market volatility comes as stocks have been under pressure for weeks, with the S&P 500 down five out of the past six weeks amid growing tariff uncertaintyGETTYBritain faces the lowest 10 per cent “baseline” tariff rate and has resisted imposing immediate retaliatory action, unlike the European Union which is impacted by a 20 per cent import tax.
Ministers still hope an economic agreement with Washington can be reached to soften the blow of the levy which strikes UK goods, along with a 25 per cent import tax on cars and separate ones for steel and aluminium. But the Government will also seek to strengthen trade ties with other countries, including by trying to rebuild ties with the European Union.
The Chancellor said: “In a changing world, this Government is accelerating trade deals with the rest of the world to back British business and provide the security working people deserve.
“We are going further, faster to create the best possible conditions for British business by working to reduce barriers to trade.”
Economists are sounding the alarm over the impact of Trump tariffs GETTY The Chancellor and Business Secretary will later meet India’s finance minister for talks aimed at negotiating a deal with the country as the Chancellor said she wanted to create “the best possible conditions” for British business in a “changing world”.
Prime Minister Sir Keir Starmer on Tuesday reiterated his call for a calm approach to the changed US trade policy as a sense of optimism returned to the financial markets after several days of heavy losses.
However, US stocks slid during evening trading on Wall Street after the White House confirmed a 104 per cent tariff rate on some Chinese imports would become a reality.
Beijing had vowed to “fight to the end” and warned of countermeasures after Trump threatened on Monday to raise his levies even further on the world’s second-largest economy.
