Fear returned to the London stock market today after Donald Trump’s brutal new “Liberation Day” tariffs came into force and China responded with new retaliation.
The FTSE 100 plunged again in fevered trading, down 231.05 points, or 2.92%, at 7,679.48 by the close largely wiping out yesterday’s relief rally respite.
It came as Beijing responded to US tariffs of 104% on Chinese exports of goods with extra tariffs of 84% on US imports, raising the stakes alarmingly once again.
U.S. Treasury Secretary Scott Bessent said China’s latest retaliatory tariffs were “unfortunate .”
Amid the tit for tat tariff exchanges the City’s blue chip index lurched downwards. It has now lost more than 13%, or 1,200 points, since hitting an all time high of 8,871 in early March.
Mining, energy and financial stocks were in investors’ cross hairs with Anglo-American down 6.3%, Barclays falling 4.5% and BP 4.4% lower.
The only member of the index to see a small rise was defence giant BAE Systems.
There was also heavy falls on leading Continental European markets with France’s CAC and Germany’s DAX both down around 3.8%.
The latest wave of selling came after Asian stock markets traded heavily lower overnight with Wall Street expected to follow suit later today.
Investors are increasingly worried that a lengthy and damaging trade war between the world’s two biggest economies will spark a global recession.
But a defiant Trump has refused to make concessions telling National Republican Congressional dinner last night: “I know what the hell I’m doing.”
Tariffs of 104% on the $440 billion of annual goods exports from China to America were triggered at 5.01am London time this morning.
China described the move as blackmail and has pledged to “fight to the end.”
Tariffs also came into force against dozens of other countries with Cambodia facing a tax rate at 49% and Vietnam at 46%. The European Union faces a 20% wall but the UK only 10%.
The impact will not be felt in US shops immediately as any goods already in transit as of midnight will be exempt from the new levies as long as they arrive in the US by 27 May.
Susannah Streeter, head of money and markets, at investment platform Hargreaves Lansdown, said: ‘’The feared escalation of the trade war is playing out and it’s sent another jolt of deep pessimism through markets.
“Trump continues to act as though trade is his plaything, and he’s wound up the equity rollercoaster for another plunge downwards. “
In Japan, where 24% tariffs came into effect, the main stock market index the Nikkei 225 slid 4.1% or 1,356 points to 31,656.20.