FTSE 100 live: EU pleads with China not to escalate trade war after new Trump tariff threat

Rachel Reeves has appealed directly to families facing a financial squeeze from Donald Trump’s tariffs, with millions of savers’ pensions and other savings pots being blown apart by the trade war.

“I know that this is an anxious time for families who are worried about the cost of living, we have your backs,” she told MPs.

“And British businesses who are worried about what a changing world will mean for them… we have your backs too,” she added.

The UK government is working to agree a trade deal with India and talks will take place on Wednesday, Rachel Reeves told MPs.

The Chancellor said she had spoken to ministers in Canada, Australia, Ireland, France, Spain and the European Commission since the imposition of tariffs by Donald Trump, and would have separate discussions with India on Wednesday.

Ms Reeves said: “We will pursue these talks in earnest. Tomorrow I will hold talks with the Indian government as part of our two nations’ economic and financial dialogue, as we seek to secure a new trade deal with India.”

UK Chancellor Rachel Reeves has told MPs the Donald Trump’s tariffs have had and will continue to have “huge implications for the world economy”.

She continued: “These implications have been reflected in the reaction that we’ve seen in global markets in recent days, which the financial authorities have of course been monitoring closely.

“This morning I spoke to the governor of the Bank of England, who has confirmed that markets are functioning effectively and that our banking system is resilient.”

Faced with mounting alarm in the US over his trade war, Donald Trump has resorted to his stock-in-trade of name calling. He has invented a new word to describe his critics: “Panican”.

He took to his Truth Social platform to defend himself against those opposed to his tariffs, who include some who have strongly supported him in the past.

He told them: “Don’t be Weak! Don’t be Stupid! Don’t be a PANICAN (A new party based on Weak and Stupid people!).”

The EU has reiterated that “we don’t want tariffs”.

The EU spokesperson added that the bloc is waiting for the US “to engage in a meaningful way”.

Europe and the United States should have zero tariffs between them and Europe should aim for that in ongoing negotiations with the US, Finnish Foreign Minister Elina Valtonen said on Tuesday.

“Engaging in a global trade war is the surest way to achieve a global recession,” Valtonen told a joint press conference with her Swedish counterpart in Stockholm.

“But of course the European Union now has to react to what the US has put forward,” she added.

UK chancellor Rachel Reeves has said that the governor of the Bank of England had confirmed that markets were functioning effectively, as the huge implications from US tariffs sent shockwaves through global markets.

Business and money editor Karl Matchett writes:

While we’ve seen the FTSE 100 is rising today for the first time in a while, it’s worth considering exactly where that push into the green is stemming from.

In fact, it’s a fairly widespread recovery this morning, with just nine companies showing a loss – still mostly in the financials sectors.

But British Airways owner IAG is up more than five per cent, Rolls Royce is just shy of that marker and indeed the owner of the London Stock Exchange, the London Stock Exchange Group, is up 3.2 per cent.

Rachel Reeves has told the Commons “discussions are ongoing” with the US over tariffs.

The chancellor is set to meet with the US treasury secretary Scott Bessent shortly.