President tells US to ‘be cool’ as China retaliates

• Read the full story here

The boss of JP Morgan Chase bank said that the sweeping tariffs imposed by Donald Trump would probably lead to a recession.

“I think probably [a recession] is a likely outcome because markets, I mean, when you see a 2,000-point decline it sort of feeds on itself, doesn’t it,” Jamie Dimon said on the Fox Business channel. “It makes you feel like you’re losing money … You’ve got to cut back.”

The European Commission’s spokesman for trade and economic security, Olof Gill, has said member states are “pretty good at the art of the deal” when it comes to tariff responses.

He said: “In a time of crisis, the European member states appreciate the value of coherence and unity and you can see very clearly in our response to the US tariffs, for instance, that that unity is present and that that unity gives us strength and leverage in our negotiations.

“And it’s the very same in our dealings with China. Of course, there are bilateral relations between EU member states and China but I do believe our member states understand the value of acting in a coherent way when it comes to trade policy. And, therefore, we expect that that’ll be the approach.”

He said states were “absolutely” on the same page.

“We have to be very clear about who is causing the turmoil here and who is trying to positively react to try to fix it. It’s the US that started it. It’s the European Union, as far as I can see, that’s making the most efforts to try and fix it.”

Germany’s chancellor-elect Friedrich Merz has said that the European Union needs a “common response” to tariff policies and claimed that President Trump had unleashed a new turbulence in the financial markets with unknown consequences.

He was speaking as he announced a coalition deal with the centre-left Social Democrats at a press conference on Wednesday.

The most recent round of trade restrictions imposed by China are mainly targeted at US defence firms which supply the Pentagon and federal government agencies, adding to the 60 or so companies Beijing has already punished.

Beijing said the six US firms were added over arms sales or military co-operation with Taiwan and would be banned from China-related import and export activities, as well as investing in the country.

“In recent years, the six companies [have] seriously jeopardised China’s national sovereignty, security and development interests,” the commerce ministry claimed.

An economist cited by the US government to justify its tariff blitz has compared President Trump’s measures to the 9/11 attacks on America.

In its tariff policy note the White House referred to an academic paper, Trade Wars with Trade Deficits, which was published last year and whose authors have argued that the US could theoretically win a trade war against China.

However, Pau Pujolas, its co-author, said that the model outlined in his paper and that used by Trump’s government “are worlds apart”. He expressed deep regret that his work had been used to justify the trade war.

“When the Wright brothers invented the plane they didn’t think it was going to cause 9/11,” he told The Times. “If they had been alive they would have been horrified.” He added that Trump’s tariffs were “nonsense that will cause a worldwide recession … if I am sure of something right now it is that we are entering a worldwide recession”.

President Trump has again taken to his Truth Social site to try to reassure the American public, telling them that “everything is going to work out well”, despite another day of market turbulence.

“BE COOL! Everything is going to work out well,” he wrote. “The USA will be bigger and better than ever before!”

In a follow-up post he added: “THIS IS A GREAT TIME TO BUY!!! DJT”

China has issued a risk alert to its citizens who are travelling to the US, according to Beijing’s culture ministry.

Last year about 1.6 million Chinese people travelled to the US, according to Statista, which was a significant increase from the previous year, though still below pre-pandemic levels, when more than three million Chinese visited.

After President Trump boasted that foreign leaders were “kissing my ass” in an attempt to win deals on tariffs, Giorgia Meloni’s opponents mocked her for planning a trip next week to Washington to try to secure such an agreement.

Elly Schlein, the head of the opposition centre-left Democratic Party, said that after the Italian prime minister “triumphantly” announced her April 17 visit, “the American president used unrepeatable words to insult those who propose a meeting to defuse a global financial and economic crisis generated by his tariffs policy”.

She added: “It’s not a good look for Italy.”

Matteo Renzi, the former Italian prime minister, posted on X that Meloni and her pro-Trump deputy, Matteo Salvini, “promise to prioritise Italy and end up on the list of … kissers”.

He added that the two leaders “are not patriots but followers [of Trump]”.

US stocks edged down again at the opening bell on Wall Street on Wednesday as the trade war between President Trump and China escalated.

Wall Street’s S&P 500 stock index fell by 0.08 per cent, or 4.21 points, to trade at 4,978.56 while the Dow Jones industrial average fell by 0.42 per cent, or 159.61 points, to 37,485.98. The tech-heavy Nasdaq Composite index climbed by 0.32 per cent, or 49.46 points, to 15,317.38.

The downward moves in US stocks came after China retaliated with an extra 50 per cent tariff on top of existing levies of 34 per cent on American imports. Trump imposed a total tariff of 104 per cent on Chinese imports.

The dollar index, which measures the greenback against six comparable currencies, fell by 0.78 per cent.

In afternoon trading in Europe the FTSE 100 dropped by 2.61 per cent, while the pan-European Stoxx 600 index was down by 3.23 per cent.

The EU’s first round of retaliation tariffs has been signed off in a Brussels committee of national officials.

Only one country opposed the move. Fifteen would have been needed to stop the proposal, agreed by trade ministers in principle on Monday.

“The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy,” a statement by the European Commission said. “The EU has stated its clear preference to find negotiated outcomes with the US, which would be balanced and mutually beneficial.

“Duties will start being collected as of April 15. These countermeasures can be suspended at any time, should the US agree to a fair and balanced negotiated outcome.”

Sir Keir Starmer said doing a trade deal with the United States would not be enough to address the tariff trade war.

The prime minister said the UK was hoping to negotiate a better outcome than the 10 per cent tariff on its exports to the US which were announced by President Trump last week.

“We are negotiating and we hope to improve the situation. But what I mean by this is that simply thinking that any change in the rates, or any deal is going to be enough, to my mind is wrong, because just as we’ve done with defence and security, where we [are] recognising it’s a changing world, we’ve got to step up and act differently,” he told ITV.

“In that case with defence spend, co-ordinating better across Europe, so too with trade and the economy … there’s a changing world, we’re entering a new era. We have to think and behave in a way that reflects that, and that’s why we’ve turbocharged what we’re doing on the economy.”

In further remarks, Scott Bessent, the Treasury secretary, said America’s goal was to reach trade agreements with its allies and then “approach China as a group”.

“I think what a lot of people are missing here is that the levels that were put out last Wednesday are a ceiling … if you don’t retaliate,” he said.

He added: “I can tell the rest of the world — I’m not sure whether the prime minister or the economic minister in Spain made some comments this morning, oh, well, maybe we should align ourselves more with China — that would be cutting your own throat, because I can tell you that these Chinese exports that the US tariff wall is going to keep out, that China, for all of you who can remember that Disney movie of the brooms carrying the buckets of water, that is the Chinese business model. It never stops. They just keep producing and producing and dumping and dumping, and it’s going somewhere.”

In the African kingdom of Lesotho, garment workers arrived for work “feeling panicked and terrified” as President Trump’s most punitive trade tariff took effect.

Known as “the denim capital of Africa”, the tiny state has become one of sub-Saharan Africa’s largest exporters of clothing to the US — mostly textiles for brands such as Levi’s and Calvin Klein. A new 50 per cent tariff — the highest levy on Trump’s list of target economies — is predicted to hollow out the garment sector, which provides 30,000 jobs mostly to women.

Sam Mokhele, a union chief, estimated that at least half of those workers would soon be out of work in Chinese and Taiwanese-owned factories in Lesotho, which has a population of two million and is already one of the world’s poorest nations.

“What can I tell our members who are feeling panicked and terrified?” Mokhele, the secretary-general of the National Clothing Textile and Allied Workers Union, asked.

In Madagascar, the next hardest-hit in Africa, the new 47 per cent tariff is also likely to mean 60,000 jobs being cut in the textile and clothing sector, which accounts for one fifth of the island state’s GDP.

In his first comments since China announced an 84 per cent tariff on US imports, Trump took to Truth Social and claimed: “This is a GREAT time to move your COMPANY into the United States.”

The US president added: “ZERO TARIFFS, and almost immediate Electrical/Energy hook ups and approvals. No Environmental Delays. DON’T WAIT, DO IT NOW!”

The sell-off in UK government bonds ratcheted up this afternoon, after China responded with extra tariffs of 84 per cent in response to President Trump’s 104 per cent charge on their goods.

The rate on the 30-year UK government bond, or “gilt”, surged by more than 30 basis points to more than 5.63 per cent, the highest level since 1998. The yield on the ten-year benchmark government bond climbed by 16 basis points to 4.76 per cent.

The rise follows the biggest one-day gain in US government borrowing costs since September 2022 this week.

The pound strengthened by 0.36 per cent against the dollar to $1.28 while the euro leapt by 1.07 per cent against the greenback to $1.10.

Oil prices fell to their lowest level in four years on Wednesday as traders anticipated much lower demand due to reduced trade amid President Trump’s tariffs fallout.

The price of a barrel of Brent crude, the global oil benchmark, slid by 5.60 per cent to $59.12, its cheapest price since 2021. The price of a barrel of West Texas Intermediate oil slipped by 5.92 per cent to $56.05, also a four-year low.

Oil prices have fallen by about $20 since Trump re-entered the White House in January, with losses accelerating after he announced a harsher-than-anticipated set of tariffs on goods imported to the US. In response, shares in the oil majors BP and Shell fell sharply, down by 6.59 per cent and 4.41 per cent respectively.

Scott Bessent, the US Treasury secretary, said: “I think it’s unfortunate that the Chinese actually don’t want to come and negotiate, because they are the worst offenders in the international trading system.

“They have the most imbalanced economy in the history of the modern world. And I can tell you that this escalation is a loser for them. That they have some very smart economists, the academicians, technocrats within their bureaucracy, and they would be telling the leadership that we do not have the edge here. They are the surplus country.”

Scott Bessent, the US Treasury secretary, brushed off China’s retaliatory tariffs on US imports, saying China exported far more than it imported.

“They are the surplus country,” Bessent said in an interview with Fox Business on Wednesday. “Their exports to the US are five times our exports to China. So they can raise their tariffs, but so what?”

Bessent also raised the prospect of Chinese companies being kicked off US stock exchanges, saying “everything is on the table”.

China has accused the United States of escalating a trade war as it imposed a retaliatory 84 per cent tariff on US goods, with the world’s number two economy showing no signs of backing down from the latest stoush.

“The US escalation of tariffs on China is a mistake upon a mistake, severely infringing upon China’s legitimate rights and interests, and seriously damaging the multilateral trading system based on rules,” China’s State Council Tariff Commission said in a statement.

China’s commerce ministry also imposed export controls on 12 American companies and added six more firms to its “unreliable entity list”, which effectively bans them from trading or investing in China.

The Vix volatility index, often called the fear gauge, is indicating significant market concerns about the economic repercussions of the trade dispute between the US and China.

The index has risen to 54.79 after China ratcheted up the Sino-US trade war by retaliating to President Trump’s 104 per cent tariffs with the imposition of 84 per cent duties on US goods.

The last time the index rose above the 50 level was during the turmoil created by the pandemic. The Vix is at about the level reached in 2020 but is below the level hit during 2008-2009 global financial crisis.

China filed a new complaint to the World Trade Organisation on Wednesday against further US tariff measures, the Chinese mission to the WTO said in a statement.

It was also reported that Beijing expressed grave concern at what it called “reckless tariffs” by the Trump administration.

The fresh complaint emerged at about the same time as China announced it was increasing its retaliatory tariffs on US imports from 34 per cent to 84 per cent.

China has said it will raise tariffs on US products to 84 per cent, exacerbating a trade war between the world’s two largest economies.

When the US initially raised tariffs on Chinese goods to 20 per cent in early March, which it said was because of the country’s role in fentanyl production, Beijing’s response was relatively measured.

It held off imposing blanket tariffs of its own, only going as far as to impose a series of targeted 15 per cent levies on some US agricultural products.

However, when President Trump imposed an additional 34 per cent “reciprocal” tariff on China last week, bringing total duties to 54 per cent, it responded immediately in-kind with its own blanket 34 per cent import tax on US imports.

In the face of this retaliation Trump chose to increase the stakes by raising the US tariffs on China by a further 50 per cent — bringing total tariffs on exports from China to 104 per cent. In response, China has decided to match Trump’s 50 per cent increase, meaning US exports to China will face a total duty of 84 per cent.

The FTSE 100 has fallen further — now down 3.5 per cent today — since China announced its retaliatory tariffs of 84 per cent a short time ago.

The fall in the index of the biggest listed firms in the UK was matched by similar falls in European bourses, with the German Dax and the French Cac 40 both down 4 per cent.

Investors will be closely watching the response of US markets when they open this afternoon.

Brussels will start consultations on the second part of its response to President Trump’s blanket tariffs — worth €373 billion and hitting more than 70 per cent of EU exports to the US — next week.

It will be hard for the EU to hit back without self-inflicted pain on European industries or escalating a transatlantic trade war beyond goods to services.

France, Germany and Spain want a quick and strong retaliation but Italy, Greece, Romania and Hungary are opposed to escalation that threatens a trade war.

Giorgia Meloni, the populist Italian prime minister, who is close to Trump will be in Washington next week to plead the European case.

Internal EU political wrangling pivots on whether to use special trade defence measures — a so-called “anti-coercion instrument” — to go beyond goods to strike back on US services, such as tech, banking or public procurement.

Russia has described President Trump’s imposition of tariffs of more than 100 per cent on China as evidence that Washington lacks respect for the foundations of international trade.

Maria Zakharova, the spokeswoman for the Russian foreign ministry, said the US tariffs were in violation of World Trade Organisation rules and showed that “Washington no longer considers itself bound by the norms of international trade law”.

Moscow has tried to avoid outright criticism of the United States since Trump returned to the White House in January. However, while Russia was one of the few countries that was not targeted by Trump’s tariffs, they have triggered a decline in global oil sales that threaten the Kremlin’s ability to fund its war in Ukraine.

China is one of Moscow’s biggest allies and its purchases of Russian oil and gas have provided the Kremlin with an economic lifeline amid western sanctions.

Elvira Nabiullina, the head of Russia’s central bank, said today that the unfolding trade war between China and the United States posed a “significant risk” to Russia’s economy.

China has announced that it will impose additional tariffs on the US, taking the total up to 84 per cent on all imported goods.

The new charges will take effect from April 10.

President Macron “regrets Donald Trump’s decision, a decision that is questionable economically”, Sophie Primas, the French government spokeswoman, said.

France will not retaliate alone, she added, and said that “salvation” would be only through the European Union. “We must find a single European voice in order to be in a position of strength to talk to President Trump,” she said, estimating that 28,000 French businesses would be hit by the tariffs.

According to François Villeroy de Galhau, the governor of the Bank of France, the tariffs will have “little or probably no effect on inflation” in Europe, but could cause a 0.25 per cent fall in the eurozone GDP.

Britain’s two big pharmaceutical companies have had billion of pounds wiped off their market value after President Trump vowed to impose “major tariffs” on the industry.

Trump said during a dinner on Capitol Hill last night: “We’re going to tariff our pharmaceuticals and once we do that they’re going to come rushing back into our country because we’re the big market. So we’re going to be announcing very shortly a major tariff on pharmaceuticals and when they hear that they will leave China, they will leave other places because they have to — most of their product is sold here and they’re going to be opening up their plants all over our country.”

• Read in full: Investors ditch British pharmaceuticals giants

The Bank of England said the “global risk has deteriorated, and uncertainty has intensified” since the announcement of US tariffs.

“The probability of adverse events, and the potential severity of their impact, has risen,” the bank’s financial policy committee said in its first report since the tariffs were announced.

The committee said it believed the UK’s banking system had the capacity to support households and businesses “even if the economic and financial conditions were to be substantially worse than expected”.

Tata Steel Netherlands has announced plans to cut 1,600 jobs in the Netherlands, blaming the cut on “challenging demand conditions in Europe driven by geopolitical developments, trade and supply chain disruptions and energy costs”.

“This reorganisation is expected to lead to a loss of around 1,600 management and support function roles,” Tata said in a statement, meaning about one in five jobs according to Dutch media reports.

Kemi Badenoch said the prime minister needed to strike a trade deal with the United States based on “mutual gain”.

The Conservative leader, a former business secretary, said on a local election visit to Worcestershire: “Trade deals should not be about tit-for-tat and giving things away. They are about gaining on both sides.

“I am a former trade secretary. I signed the biggest trade deal we did since Brexit, the Trans-Pacific Partnership. We didn’t have to lower our food standards and where countries did ask us to lower food standards, like Canada, I said no to the trade deal we had existing with them.

“So we don’t need to do things like that. We need to look at where there are opportunities. You look at mutual gain, recognising professional qualification, bringing tariffs down.”

Rachel Reeves said the UK government was “keeping cool heads” to ensure there was not an escalation of the tariff stand-off with the United States.

“Trade wars are to the benefit of no one, and that is why in the UK we are keeping cool heads and remaining pragmatic,” the chancellor said.

“We will always act in our country’s national interest for jobs and to support British business. We don’t want to see an escalation of tariffs. We want to do a deal that supports the UK economy.”

Madagascar could lose about 60,000 textile sector jobs because of Trump’s 47 per cent tariff on the country, an industry official has said.

Its textile and clothing sector employs about 180,000 people and accounts for about one fifth of the country’s gross domestic product.

The country of 31 million people exported $733 million in goods to America in 2024, much of that under the African Growth and Opportunity Act, which granted duty-free access to the US market for many goods produced in Africa.

“We estimate that around 60,000 jobs will be affected by the decision to raise tariffs to 47 per cent,” Rindra Andriamahefa, the executive director of an industry lobby group, said.

Beatrice Chan Ching Yiu, the president of the lobby group Groupement des Entreprises Franches et Partenaires, said: “The pandemic was one thing. What we are facing now is quite another.”

Not since 1998 have long-term UK government borrowing costs been this high — driven by UK markets being sucked into intense selling of US debt amid the tariff-induced market sell-off.

The main reason why the yield on the 30-year UK government bond was so high nearly three decades ago was that the underlying Bank of England base rate, the main variable that influences bond markets, was high too.

At the beginning of 1998, the base rate stood at 7.25 per cent, while the rate on the bond was about 5.9 per cent. The present base rate is 4.5 per cent and the 30-year yields stands at 5.4 per cent.

The difficulty in shouldering this high cost of debt is much greater for Sir Keir Starmer’s Labour government compared with Tony Blair’s. That is because at the end of 1990s economic growth was much stronger. In 1999 the UK economy expanded by more than 3 per cent, compared with just 1.1 per cent last year.

China has warned it will take “firm and forceful measures” to respond to extra US tariffs on Chinese imports which kicked in today.

Lin Jian, a Chinese foreign ministry spokesman, said the government was opposed to the “bullying practices” of the Trump administration, and added that the US must show “an attitude of equality, mutual respect, and reciprocity” if it wanted to end the dispute through negotiation.

China has yet to respond with retaliatory tariffs to the 104 per cent tariff on Chinese goods into the US, but Lin said they would “safeguard our legitimate rights and interests”.

He added: “If the US disregards the interests of the two countries and international community and insists on waging a tariff war and a trade war, China’s response will continue to the end.”

The leaders of Germany’s ascendant hard right are at loggerheads with each other over the US tariffs.

The Alternative for Germany party (AfD), which — according to an opinion poll published on Wednesday — is now the country’s most popular party, is torn between its enthusiasm for President Trump and voters’ anxieties about the pain that the trade war is expected to inflict on the export-driven German economy.

Tino Chrupalla, the AfD’s joint leader, said that the tariffs were “understandable” and “sometimes you have to limit free trade to protect your economy”.

However, he was contradicted by Alice Weidel, the party’s other national leader, who wrote on X: “Tariffs harm our economy. To avert danger, we need to scope out possibilities for a solution with the US.”

A Catalan economist cited by the US government to justify its tariff blitz has damned President Trump’s measures as “nonsense that will cause a recession”.

In its tariff policy note the White House referred to an academic paper, Trade Wars with Trade Deficits, which argued that the US could theoretically win a trade war against China.

However, Pau Pujolas, its co-author, said the model outlined in his paper and that used by Trump’s government were “totally different”.

The economist told El Pais: “Between my study and what the White House is doing, there is a very big gap. It’s nonsense, they are causing a recession.”

• Read in full: Trump used my research to calculate tariffs — but got it wrong

Lisa Nandy said she was “confident” the UK could strike a trade deal with the US.

Although the UK was on the lower end of the tariff scale with only a 10 per cent impost on imported goods, the culture secretary said the government was still hoping to negotiate a better deal with the Trump administration.

“We are committed to making sure we keep cool heads, we don’t have knee-jerk reactions. We don’t want to see the sort of retaliation and trade wars that have been happening overnight between the US and China,” she told BBC Radio 4’s Today programme.

Nandy could not, however, give a time frame on when a potential trade deal would be signed. “We are working at pace. We are very confident that we’ll get there,” she said.

Giorgia Meloni, the Italian prime minister, will try to reclaim her role as a bridge between the US and the EU when she visits President Trump on April 17 to urge him to lower tariffs on the bloc.

Announcing her visit to an audience of Italian industrialists, Meloni said she would propose the dropping of all tariffs by both the EU and the US that affect each other — an idea already backed by the EU commission head Ursula von der Leyen.

Meloni pointed out how the EU may have had a goods trade surplus of €157 billion with the US in 2023, but had a deficit of €109 billion in the services sector.

She said she would seek EU approval to divert €25 billion in EU loans and grants to shore up Italian firms suffering from Trump’s tariffs.

The French government has announced public spending cuts in response to the global turmoil unleashed by President Trump.

Amélie de Montchalin, the minister for public accounts, said she would take an extra €5 billion off the expenditure initially planned in this year’s budget. It comes on top of the €30 billion cuts already envisaged.

“These €5 billion that we are going to cancel or postpone or divert — it is our response to an unstable world,” de Montchalin said, adding that growth was likely to be lower than expected, along with state revenue.

She said the cuts were necessary to reduce French debt of €3.3 trillion. The government also wants to bring down the public deficit from 5.8 per cent of national wealth in 2024 to 5.4 per cent this year.

One of Germany’s leading economists has warned that President Trump’s tariff war risks “catapulting us back into the 1930s”.

Michael Hüther, the head of the German Economic Institute in Cologne, said that the measures could lead to a global recession and a self-reinforcing collapse in the stock market as investors were forced to write off their losses and carry out “distress sales” of other assets.

Hüther told Der Spiegel that Trump’s “atom bomb” to world trade would drive German businesses back into the arms of China.

• Read in full: Will Trump tariffs mean Chinese bargains at Christmas?

Shares in the British pharmaceutical company AstraZeneca fell 6 per cent in early trade after President Trump raised the prospect of a “major” tariff on all pharmaceutical imports as part of the trade wars. Medicines have previously been exempt from tariffs.

The British pharmaceutical company GSK saw shares fall 5 per cent on the London Stock Exchange, while the Danish multinational Novo Nordisk — which produces the weight-loss drugs Ozempic and Wegovy — was down 5 per cent on the Danish bourse.

Shares in the French pharmaceutical company Sanofi (5.5 per cent) and the German biotech firm Sartorius (4.34 per cent) were also down on Wednesday morning.

The European Union is expected to approve a first round of retaliation to President Trump’s tariffs on Wednesday.

The list has been watered down from a value of about €26 billion — the cost of the US tariffs — to €21 billion after resistance from national governments. EU tariffs on bourbon, as well as other American whisky and wine, were dropped after Trump threatened a 200 per cent tariff on European alcohol.

There will be EU duties of 25 per cent, the same as Trump’s on metals, on a range of American exports, including tobacco and orange juice.

The first round comes into legal effect on April 15 and most tariffs are expected to take effect on April 16.

Deutz, a German company that makes engines for farming and construction vehicles, said it planned to fully add tariffs to the prices that it charges American customers, partly because many of the group’s rivals are also based outside the US.

“It will have the effect that everything will be passed along to customers,” Sebastian Schulte, the chief executive, said, adding that smaller rival engines were manufactured in Japan and Britain.

By William Hague

“You should always expect the president to do what he said in the election campaign,” a member of his administration warned me recently. Jokingly, he added: “He doesn’t realise that you’re not meant to do it.”

President Trump is indeed sticking to his promises, regardless of the outrage. That he is not like normal politicians in this regard is a crucial part of his appeal, which is one reason he is unlikely to backtrack once he has taken a position. At Davos in January, wise-looking American commentators were walking around advising Europeans reassuringly to “take him seriously but not literally”. But the ten weeks since then have revealed we have to take him both seriously and literally. The plunge in stock markets shows that investors have only now realised that.

• Read in full: Received wisdom on the president was wrong: he means precisely what he says

Long-term UK government borrowing costs climbed to their highest level in nearly 30 years on Wednesday.

The rate on the 30-year UK government bond, otherwise known as a “gilt”, jumped by 0.16 percentage points to 5.507 per cent — its highest point since 1998 — surpassing the previous milestone set in January.

The surge comes after the yield on the 30-year bond, on Monday, registered its largest one-day increase since the fallout of Liz Truss’s ill-fated mini-budget in September 2022. Bond prices and yields move in opposite directions.

Short-term UK government yields decreased on Wednesday as investors predicted a greater chance of the Bank of England cutting interest rates quickly this year to offset the hit to the economy from President Trump’s tariffs.

The rate on the two-year bond dropped by 0.07 percentage points to 3.881 per cent. The yield on the benchmark ten-year bond climbed by 0.06 percentage points to 4.667 per cent.

The rise in UK government bond yields could squeeze Rachel Reeves’s fiscal headroom, raising the chances of tax rises or spending cuts at the autumn budget.

Malcolm Turnbull, the former Australian prime minister, said that he warned Donald Trump in his first term as US president that any attempt to block all Chinese imports would lead to a “global depression”.

Turnbull, who was the Australian leader from 2015 to 2018, said he had held many discussions with Trump in his first administration on the US’s trade deficit with China.

“It was almost an obsession with him,” Turnbull wrote on X, quoting a passage from his 2020 book A Bigger Picture. He said that he had urged Trump to stop trying to get the Chinese to “buy more of our stuff” and to focus on a more level playing field.

He said that at a later meeting Trump asked Turnbull what he thought would happen if he banned all Chinese imports into the United States. “ ‘A global depression,’ I said as quietly as I could,” Turnbull said.

He added on X: “[It’s] de ja vu all over again.”

European stocks fell sharply again during opening exchanges as yesterday’s market rally gave way to renewed recession concerns after President Trump’s reciprocal tariffs came into effect.

The pan-European Stoxx 600 index slid by 2.66 per cent, or 12.94 points, to 473.97; while Germany’s Dax index dropped by 2.28 per cent, or 463.22 points, to 19,817.04. France’s Cac 40 index fell by 2.33 per cent, or 165.43 points, to 6,934.99 and Italy’s FTSE MIB index declined by 1.54 per cent, or 518.55 points, to 33,138.50.

In London, the FTSE 100 shed 1.54 per cent, or 121.92 points, to trade at 7,788.61 and the mid-cap FTSE 250 index dropped by 1.57 per cent, or 287.61 points, to 18,061.54.

Today’s fresh stock sell-off comes after Asian and European equities recovered ground on Tuesday on hopes that Trump may be open to watering down the most punitive tariffs on US trading partners.

However, the president dashed this speculation after the White House confirmed that the US would impose a 104 per cent tariff on some Chinese imports, triggering a reversal in fortunes for US stocks last night.

Tariffs and trade wars have sent global markets into turmoil, with hundreds of billions of dollars wiped off the stock market since “liberation day” on April 2. Even President Trump’s closest political and business allies have not been spared — in fact, they are among the hardest hit.

Here we look at who have been the biggest losers from the chaos — and who has actually gained. Using data from the Bloomberg Billionaire Index, we have identified the tech and industry giants who have seen their value change the most.

• Read in full: Musk and Zuckerberg are among those hit hardest

Lisa Nandy said she was confident that the UK would be able to reach a “commercial deal” to help British Steel survive, despite the threat of cheap Chinese steel flooding the market after the US tariff trade wars.

The culture secretary told Times Radio: “The reason we haven’t ruled out other options is because we know how important the steel industry is and we’re working on contingency plans to make sure that we’ve got all the options available to us but the commercial option is very much our preferred option and we’ll continue to work with industry to achieve it.

“We are working with our allies in order to ensure that we secure trade deals, that we continue to trade, that we continue to support British industry by making sure that they have access to markets overseas.”

Rachel Reeves said the UK was “accelerating trade deals with the rest of the world” as US tariffs came into effect on Wednesday.

The chancellor and business secretary will meet India’s finance minister for talks later today, aimed at negotiating a deal with the country, as Reeves said she wanted to create “the best possible conditions” for British business in a “changing world”.

Sir Keir Starmer, the prime minister, 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.

The FTSE 100 has opened down 2.4 per cent, dragged down by mining and financial shares, while the FTSE 250 is 2 per cent lower.

The pound has strengthened to above $1.28 against the dollar. The dollar has weakened after President Trump’s tariffs on China took effect, with traders buying safe-haven gold as global trade tensions and recession fears intensified. Gold rose 2.3 per cent to $2,053 per troy ounce.

At an event in Washington on Tuesday evening, the US president insisted he was in control despite the market turmoil of recent days.

“I know what the hell I’m doing,” Trump said. “I know what I’m doing, and you know what I’m doing too.

“I’m the only one that would have done the tariffs, because everybody was afraid. They were afraid of being criticised.”

Germany is at risk of another recession as a result of a trade war sparked by President Trump’s tariffs, Jörg Kukies, the finance minister, said on Wednesday.

“A possible trade conflict increases the risk of recession, there is no question about that,” Kukies told the Deutschlandfunk broadcaster.

Europe’s largest economy is already hurting from two consecutive years of recession. German economic institutes are expected to adjust down their forecast for 2025 to just 0.1 per cent growth, under projections that do not factor in the latest tariffs under Trump.

Britain will not make any changes to its Online Safety Act as part of trade negotiations with the US, Lisa Nandy, the culture secretary, said on Wednesday.

“We’ve been really clear that we have to regulate the online space to make sure that it is a safe space, just as we would do in the real world,” she told Times Radio, when asked if she would consider changing the law.

“That is not on the table as part of a trade negotiation.”

President Trump has mocked other world leaders, claiming that many are “kissing my ass” as they try to secure a deal on tariffs.

A a Republican Party event in Washington hours before his tariffs came into force, he told the laughing audience: “I’m telling you, these countries are calling us up, kissing my ass.

“They are dying to make a deal, ‘please, please sir let me make a deal, I’ll do anything, I’ll do anything sir’.”

Trump also attacked the critics of tariffs within his party and said: “You don’t negotiate like I negotiate.”

The FTSE 100 is forecast to open 3 per cent lower when London markets open shortly. Germany’s Dax is expected to open down almost 4 per cent.

Futures markets point to a fifth straight day of losses on Wall Street with the S&P 500, Dow Jones and Nasdaq all expected to open down more than 2 per cent. The S&P 500 has shed nearly $6 trillion in value since Trump unveiled the tariffs a week ago — the deepest four-day loss since the benchmark’s creation in the 1950s.

Ting Lu, the chief China economist at Nomura, told Reuters: “The US and China are stuck in an unprecedented, and expensive, game of chicken, and it seems that both sides are unwilling to back down.”

Money markets have also seen sharp moves. US Treasuries fell overnight in a sign that investors are dumping even their safest assets. The yields on a ten-year US Treasury rose — as the price of the bonds fell — even as traders ramped up expectations that the Federal Reserve would cut rates.

The dollar has fallen against safe-haven currencies. The ICE US dollar index, which measures the dollar against a basket of six major currencies, fell almost 1 per cent overnight and is now 6 per cent lower over the past three months.

The Chinese yuan hovered just above the lowest level since late 2007 as Beijing allowed the currency to depreciate further amid the sharp escalation in the trade war.

By Richard Fletcher, Business Editor

Japan’s Nikkei 225 fell 4.5 per cent in overnight trading, after a brief rally on Tuesday over hopes that Tokyo could strike a trade deal with the US.

Hong Kong’s Hang Seng was trading 2 per cent lower and the Shanghai Composite was down 0.08 per cent.

Brent crude fell 4 per cent overnight to trade at close to $60 on fears of a drop in demand amid slowing economic growth. Year-to-date Brent crude was trading down more than 32 per cent lower.

The White House has confirmed that cheap Chinese small parcels will no longer be exempt from tariffs.

The change will affect shipments from fast fashion brands such as Shein and Temu which previously enjoyed duty-free treatment for items under $800.

Starting on May 2, these goods from China and Hong Kong will be subject to either a duty rate of 90 per cent of their value, or $75 per item. This will increase to $150 after June 1, according to an amendment to President Trump’s executive order published today.

President Trump’s sweeping tariffs on goods have come into effect today. China has been hit with a 104 per cent levy after Beijing refused to meet his deadline to withdraw its own retaliatory levies on the US.

The extra duties — which began at one minute past midnight (5.01am UK time) on Wednesday — caused US stocks to slide into negative territory after an initial rise, and major indexes across Asia opened lower this morning.

The customised rates for nearly 60 economies supersede the baseline duties that took effect on Saturday — the new tariffs ranged from 11 per cent to 50 per cent.

Trump conceded that his tariffs had been “somewhat explosive”, but claimed the policy was already making $2 billion a day for the US economy. “The money is pouring in at a level we’ve never seen before,” he said.