Donald Trump’s 10% tariff on UK products has officially come into force, with global stock markets plunging deeper into the red in response to the imposition of import taxes.
Prime Minister Sir Keir Starmer is expected to spend the weekend speaking to foreign leaders about the tariffs, after calls with the prime ministers of Australia and Italy on Friday in which the leaders agreed that a trade war would be “extremely damaging”.
The FTSE 100 plummeted on Friday in its worst day of trading since the start of the pandemic, while markets on Wall Street also tumbled.
Australia’s stock market dropped 191.90 points (2.44%) at close on Friday, setting a new 100-day low, while Italian markets tumbled nearly 8%.
The “baseline” 10% US tariff on goods imported from around the world came into effect shortly after 5am on Saturday UK time.
Many other countries will see their tariff rates increase above that next week – including the EU, which will be hit with a 20% rate.
A 25% tariff imposed on all foreign cars imported into the US came into effect on Thursday.
Trading across the world has been hammered in the aftermath of the President’s announcement at the White House on Wednesday.
London’s top stock market index shed 419.75 points, or 4.95%, to close at 8,054.98 on Friday, the biggest single-day decline since March 2020 when the index lost more than 600 points in one day. The Dow Jones fell 5.5% on Friday as China matched Mr Trump’s tariff rate.
Beijing said it would respond with its own 34% tariff on imports of all US products from April 10.
All but one stock on the FTSE 100 fell on Friday, with Rolls-Royce, banks and miners among those to suffer the sharpest losses.
Downing Street said that Sir Keir spoke to Australian prime minister Anthony Albanese and Italian premier Giorgia Meloni and had “been clear the UK’s response will be guided by the national interest”.
Issuing a read-out of their separate conversations on Friday, Number 10 said the leaders “all agreed that an all-out trade war would be extremely damaging”.
A spokesperson said the PM “has been clear the UK’s response will be guided by the national interest” and officials will “calmly continue with our preparatory work, rather than rush to retaliate”.
“He discussed this approach with both leaders, acknowledging that while the global economic landscape has shifted this week, it has been clear for a long time that like-minded countries must maintain strong relationships and dialogue to ensure our mutual security and maintain economic stability,” the spokesperson added.
It is expected that Sir Keir will take further calls with counterparts over the weekend.
Ministers have so far avoided criticism of Mr Trump as they seek to secure a trade agreement with America, which they hope could secure some exemption from the tariffs.
However, the Government has drawn up a list of products that could be hit in retaliation, and is consulting with businesses on how any counter measures could impact them.
Chancellor Rachel Reeves said on Friday that the Government is “determined to get the best deal we can” with Washington.
“Of course, we don’t want to see tariffs on UK exports, and we’re working hard as a government in discussion with our counterparts in the US to represent the British national interest and support British jobs and British industry,” the Chancellor said.
The Liberal Democrats have said that the Government’s “attempts to appease the White House” are not working, and called on ministers to coordinate a response with allies.
Calum Miller said in a statement: “We need to end this trade war as quickly as possible, but the Government’s attempts to appease the White House and its offers to cut taxes on US tech billionaires simply aren’t working.
“Instead, the best way to end this crisis is to stand shoulder to shoulder with our European and Commonwealth friends. We must coordinate our response and strengthen our trading relations with our reliable allies. That’s how we can protect our economy from Trump’s bullying.”
