London’s FTSE 100 has endured its worst trading day since the onset of the Covid-19 pandemic, plummeting 4.95% following the announcement of sweeping US tariffs by Donald Trump. The index’s sharp fall has sparked fears of a renewed global economic crisis, with analysts warning of knock-on effects for businesses, jobs, and households across the country.
The last time the FTSE experienced such a dramatic decline was in March 2020, as Britain entered its first national lockdown. Among the biggest casualties were defence and engineering giant Rolls-Royce, which shed more than 10% of its value, and major mining firms such as Antofagasta, Glencore, Fresnillo and Anglo American, all of which saw losses exceeding 8%.
Banks also took a substantial hit, with Barclays and NatWest both finishing the day nearly 8% lower. Asia-focused Standard Chartered dropped by 4%, as global banking stocks reeled under the pressure of market volatility and economic uncertainty.
The dramatic sell-off followed President Trump’s declaration of a 10% tariff on most US imports, and a staggering 25% tariff on foreign cars, including those from Britain. The White House framed the move as a bold step towards “economic independence,” but critics around the world see it as a reckless gambit that could ignite a full-blown trade war.
Markets in France, Germany, Japan, South Korea and Australia also fell for a second consecutive day. The Cac 40 in Paris dropped 0.92%, Germany’s Dax slipped 0.74%, Tokyo’s Nikkei 225 slid 4.3%, and South Korea’s Kospi tumbled 1.8%. Australia’s S&P/ASX 200 declined by 2.2%.
Adding fuel to the fire, China announced retaliatory tariffs of 34% on US goods effective from April 10 and imposed strict export controls on rare-earth elements critical to advanced manufacturing. Beijing also blacklisted 11 US entities under its “unreliable entity” framework, signalling a sharp escalation in hostilities.
Stephen Innes of SPI Asset Management warned: “Trump has detonated the most aggressive trade shock the market has seen in decades.” Meanwhile, Olu Sonola of Fitch Ratings predicted that many nations could “end up in recession” as a result of this economic brinkmanship.
The turmoil saw investors flee risky assets in favour of safe havens such as government bonds. Wall Street’s VIX volatility index, often referred to as the “fear gauge”, surged to 27.30, its highest level in three weeks. US markets themselves were not spared, with the S&P 500 losing over 4% and the Nasdaq dropping more than 5%, wiping out an estimated £1.5 trillion in stock value. Tech giants like Apple, Nvidia and Amazon suffered heavy losses.
Despite the global fallout, President Trump remained defiant. Speaking from the White House rose garden, he claimed the tariffs were “going well” and predicted markets would “boom” in due course.
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However, his comments were met with growing alarm in Britain. Prime Minister Sir Keir Starmer acknowledged the 10% tariff on UK goods would have “an economic impact,” especially with thousands of jobs at risk in the automotive sector alone. A new 25% levy on car imports is particularly feared to jeopardise as many as 25,000 British jobs.
Speaking to business leaders at Downing Street, Sir Keir said: “Last night the President of the United States acted for his country, and that is his mandate. Today, I will act in Britain’s interests with mine.”
The UK government has set a May 1 deadline for consultations on retaliatory measures and published a list of American products that could face counter-tariffs. Business Secretary Jonathan Reynolds confirmed that ministers were “negotiating intensively” with Washington while reserving the right to act if no deal is struck.
As businesses await further clarity, the mood across British industry remains tense. While hopes remain for a negotiated resolution, the sharp decline in markets has laid bare the potential cost of a prolonged trade war.
