Donald Trump’s baseline tariff of 10% on products from all countries worldwide has taken effect.
The blanket tariff was announced by the US president on Wednesday evening, when his speech on so-called “Liberation Day” sent shockwaves across the global stock market as he unleashed sweeping taxes on imports.
Much higher tariffs against what Mr Trump branded as the “worst offenders”, such as a 20% rate for the EU and a 34% one for China, are set for 9 April.
A 25% tariff imposed on all foreign cars imported into the US came into effect on Thursday.
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The baseline tariff came into place as stock markets plummeted amid a trade war sparked by Mr Trump’s radical measures and China’s retaliatory tariffs of 34% on US imports from 10 April.
How markets reacted
The UK’s leading stock market, the FTSE 100, suffered its worst daily drop in more than five years, closing on Friday 4.95% down, a level not seen since March 2020.
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All three of the US’s major indexes, including The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite, were down by more than 5% at market close on Friday, making for the worst day in American markets since the COVID-19 pandemic.
Ever since the US president announced the tariffs, analysts estimate that around $4.9trn (£3.8trn) has been wiped off the value of the global stock market.
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As stock markets reeled, Mr Trump was largely out of public view at his golf course where he sent multiple defiant social media messages guaranteeing victory for the US economy.
One of his messages on Truth Social read: “Big business is not worried about the Tariffs, because they know they are here to stay, but they are focused on the BIG, BEAUTIFUL DEAL, which will SUPERCHARGE our Economy. Very important. Going on right now!!!”
How has the UK responded?
The UK will be affected by the 10% tariff.
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Prime Minister Sir Keir Starmer spoke to Australian Prime Minister Anthony Albanese and Italian Premier Giorgia Meloni, Downing Street said.
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”.
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The spokesperson added: “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.”
It is expected Sir Keir will take further calls with international leaders over the weekend.
Experts have predicted that UK economic growth – already expected to amount to just 1% this year – could be up to 0.5 percentage points lower than expected over coming years as a result of the tariffs.
