Trump tariffs day 3 as it happened: S&P 500 sheds $5.4tn in 2 days; China announces 34% retaliatory levies on US

JPMorgan expects the US economy to contract this year, in an abrupt reversal of their previous forecast for growth, after Donald Trump announced further tariffs in an effort to upend the international trading order.

The bank’s economists on Friday afternoon said they expected “real” GDP — adjusted for inflation — to “contract under the weight of the tariffs”, falling 0.3 per cent this year. They had previously forecast growth of 1.3 per cent.

The economists also warned of a sharp rise in the unemployment rate to 5.3 per cent. Data on Friday from the Bureau of Labor Statistics put the rate in March at 4.2 per cent.

Republican senator Ted Cruz warned of a potential “bloodbath” for his party in the 2026 midterm elections if Donald Trump’s tariffs were to push the US economy into recession.

If “every other country on earth” hit the US with retaliatory tariffs and Trump’s so-called reciprocal levies remained in place, “that is a terrible outcome”, warned the conservative senator, who is a Trump ally, on his Verdict podcast on Friday.

If the US and its trading partners kept escalating into a full-blown trade war, “it would destroy jobs here at home, and do real damage to the US economy”, Cruz said. It would also “have a powerful upward impact on inflation”.

Cruz said that if Trump’s and any retaliatory tariffs remained in place long term and pushed the US into “a recession . . . 2026 in all likelihood politically would be a bloodbath”.

The Republican party controls both chambers of Congress.

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A wild two-day sell-off has left some of Wall Street’s closely followed equities gauges tracking tech, banks and small caps in so-called bear market territory.

The Nasdaq Composite became the latest index to join the club as its 5.8 per cent drop on Friday left it 22.7 per cent below its record high in mid-December.

Big Tech stocks suffered much of the damage. An index tracking the Magnificent Seven had tumbled into bear market territory on Thursday and is now down more than a quarter since peaking on Christmas Eve.

A bear market is typically defined as a drop of 20 per cent from a peak.

The KBW bank index, which tracks two dozen big US lenders, reached a record high in January 2022. A few weeks after November’s US presidential election, the index hit a cyclical peak and is now down more than a quarter since then.

The Russell 2000, which tracks small-cap stocks that are sensitive to domestic economic growth, is also down more than a quarter since a cyclical peak in late November.

Wall Street stocks closed sharply lower as Donald Trump’s so-called liberation day tariffs continued to reverberate through financial markets and fan concerns about a global economic recession.

The S&P 500 ended Friday’s session down 6 per cent, with all 11 sectors in negative territory, after tumbling 4.8 per cent on Thursday. The tech-heavy Nasdaq Composite lost 5.8 per cent.

For the week, the S&P 500 dropped 9.1 per cent, and the Nasdaq dropped 10 per cent, their biggest weekly drops since March 2020.

US stocks were headed for their biggest weekly drop in five years, as China’s move to introduce retaliatory tariffs against the US kicked off a global trade war and spurred another steep sell-off in global equities markets.

The S&P 500 was down 5.4 per cent in afternoon trading on Friday, failing to recover from a 4.8 per cent drop on Thursday in the wake of Donald Trump’s ‘liberation day’ tariff announcement. The back-to-back drops are set to wipe about $5tn in market capitalisation from the benchmark index.

Investors received few concrete signs of imminent support from the Federal Reserve, as chair Jay Powell on Friday warned the tariff increases “will be significantly larger than expected” and would stoke “higher inflation and slower growth”.

The tech-heavy Nasdaq Composite was down 5.5 per cent in afternoon trading. That followed a 6 per cent drop on Thursday, setting the stage for back-to-back declines of greater than 5 per cent for only the fourth time on record.

Over the past five sessions, the S&P 500 has declined 8.9 per cent and the Nasdaq has dropped 9.8 per cent. Those are on course to be the indices’ biggest weekly drops since March 2020.

The Nasdaq on Friday entered so-called bear market territory, meaning the index has fallen at least 20 per cent from a recent high. The Russell 2000 index, which tracks small-cap stocks that are more exposed to domestic growth, entered bear market territory on Thursday as investors fretted about the outlook for the US economy.

Italy’s Prime Minister Giorgia Meloni has warned “panic and alarmism” could exacerbate the economic damage from Trump’s tariffs.

The Bank of Italy on Friday cut the country’s 2025 GDP growth forecast by 0.2 percentage points, to 0.5 per cent, as US tariffs weigh on Italian exports over the next year.

But in a cabinet meeting, Meloni warned the effect could be amplified “if panic and negative expectations were to break out among consumers, thus leading to a contraction on consumption and business investments”. 

She urged government institutions to “bring the discussion back to the real size of the problem”. 

President Donald Trump has signed an executive order that extends the deadline for ByteDance, the Chinese owner of TikTok, to divest the hugely popular video-sharing app and avoid a nationwide ban in the US.

Trump said on his Truth Social platform that he was extending the deadline, which had been Saturday, by 75 days. He said the extension was designed to allow US companies trying to acquire TikTok more time to finalise a deal.

“The Deal requires more work to ensure all necessary approvals are signed, which is why I am signing an Executive Order to keep TikTok up and running for an additional 75 days,” Trump wrote.

He said his administration hoped to “continue working in Good Faith with China” which he said were unhappy with the tariffs he imposed on imports from the country.

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Several North American retailers with a significant manufacturing presence in Vietnam have enjoyed a share price recovery, after Donald Trump posted positively about a conversation on tariffs he had with the southeast Asian nation’s leader. 

Shares of Nike, which has more than 100 supplier-factories in Vietnam, was up 3.8 per cent at lunchtime on Friday afternoon. Those of Lululemon, whose products are manufactured mostly in Vietnam, Cambodia, Sri Lanka, Indonesia and Bangladesh, rose 1 per cent.

Shares of Ralph Lauren, Versace owner Capri Holdings and luxury furniture maker RH were still down on Friday, but had trimmed their declines from earlier in the day.

They were among stocks that tumbled during the market rout of the past two days.

US stocks are struggling to bounce back from Thursday’s hefty 4.8 per cent drop, representing something of a contrast to recent history and potentially suggesting investor concerns about how entrenched the recent market turmoil could become.

Thursday marked the 13th time in the past 10 years that the S&P 500 dropped at least 4 per cent. In the 12 previous sessions, Wall Street’s benchmark index had closed higher the following day, according to Financial Times calculations.

On Friday, the S&P 500 was down 5.2 per cent during lunchtime trading.

Analysing the S&P 500’s almost 24,500 trading sessions starting in 1928 leading up to Thursday’s drop, there have been 155 trading days when the index has dropped at least 4 per cent. In 16 of those instances the index has followed up with another 4-plus per cent drop.

The president of French business association Medef has said US President Donald Trump’s tariffs could threaten “hundreds of thousands” of jobs in the country.

Patrick Martin on Friday said industries from aerospace to agribusiness could be hit if the US persists with its trade policies. “It could be very painful,” he told BFMTV on Friday.

However, he said that while business leaders in the US were “keeping their heads down” for now, the American people may act as a break on the administration.

“Ultimately, it’s America’s citizens who will be our best allies . . . they have lost billions and billions of dollars in recent days from their retirement savings,” he said. “Donald Trump’s popularity curve deteriorates in parallel with the stock market.”

Amazon has been one of the hardest hit technology companies during this week’s market sell-off, as investors grapple with its dependency on China to stock warehouses and fulfil orders through its “Haul” app. 

The Seattle-based conglomerate’s shares sold off 9 per cent on Thursday and it has since slid further in midday trading in New York, putting it on track for its biggest weekly loss since November 2022.

Amazon sources roughly a quarter of the products it sells from China, according to Morgan Stanley estimates. 

The ecommerce giant’s “Haul” brand — which ships goods directly from warehouses in China — will be hit by tariffs and the removal of de minimis exemptions on imports from the country, also announced by Trump on Wednesday. The so-called de minimis rules exempt shipments under $800 from duties.

Federal Reserve chair Jay Powell has warned that Donald Trump’s tariffs will stoke “higher inflation and slower growth” as the president’s plans for steep levies on the US’s trading partners shake global financial markets.

“It is now becoming clear that the tariff increases will be significantly larger than expected,” Powell said in prepared remarks to a conference in Virginia on Friday. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”

He also highlighted that risks to unemployment, which has remained subdued in recent months, were rising.

Powell’s remarks come after Trump’s announcement on Wednesday of a universal 10 per cent tariff and much bigger duties on many key trading partners has sent markets reeling. Wall Street’s S&P 500 has sustained two days of heavy selling, leaving the blue-chip index on track for its worst week since the pandemic shut large swaths of the economy in 2020.

Trump, prior to Powell’s remarks, said on his Truth Social platform: “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates.”

Powell stressed that “uncertainty” was high in terms of “what will be tariffed, at what level and for what duration, and the extent of retaliation from our trading partners”.

He said in a later press conference: “It feels like we don’t need to be in a hurry. It feels like we have time,” signalling that the central bank is minded to keep its main interest rate at its current range between 4.25 per cent and 4.5 per cent until there is more clarity about the fallout.

Powell added: “Inflation is going to be moving up and growth is going to be slowing but to me it is not clear at this time what the appropriate path for monetary policy will be.”

He also noted that “while tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent”.

European stocks chalked up their biggest daily drop since the Covid-19 pandemic shut down the global economy.

The Stoxx Europe 600 closed 5.1 per cent lower as China’s announcement it will retaliate against US tariffs signalled the start of an unpredictable and economically damaging trade war.

The UK’s FTSE 100 dropped 5 per cent, also its worst day since 2020, while the pound was 1.4 per cent weaker against the dollar.

“I think we have crossed a bridge and this is increasingly looking like a full-blown trade war,” said Guy Miller, chief market strategist at insurer Zurich.

“This approach by the [US] administration, built on misguided economic policy, is disturbing and I don’t think priced by investors.”

The Nasdaq Composite entered so-called bear market territory, leaving it down more than a fifth since a high in mid-February, as tech stocks led a tariff-induced Wall Street sell-off.

The index was 4.6 per cent lower around lunchtime in New York, taking its decline from a recent high in mid-December to more than 21 per cent.

A bear market is typically defined as a drop of 20 per cent or more from a high.

Nvidia, Apple and Broadcom tumbled 6.9 per cent, 4.2 per cent and 6.5 per cent, respectively. Netflix shed 5 per cent, while Palantir dropped more than 9 per cent. Arm Holdings fell 7.7 per cent.

Klarna has paused plans to launch a long-awaited $15bn New York IPO because of market turbulence in the US in the wake of President Donald Trump’s wide-ranging tariffs announcements.

The Swedish “buy now, pay later” fintech was set to launch its so-called IPO “roadshow” to investors next week, but the sell-off in US stocks has put the plans on ice, said a person familiar with the plans.

Klarna filed for an IPO in the US this year.

A person familiar with Klarna’s strategy said the company was under no regulatory obligation to float within a specific timeframe and that the listing could happen in several weeks’ time.

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Investors pulled back on rate cut expectations this year after Federal Reserve chair Jay Powell said that Donald Trump’s tariffs would spur “higher inflation and slower growth”. 

Traders in the futures market were pricing in roughly four quarter-point interest rate cuts this year just before midday in New York, compared to the nearly five they expected this morning before Powell’s speech and the release of strong US jobs data. 

The two-year Treasury yield, which moves with interest rate expectations, rose modestly, though remained lower on the day. 

Hedge funds sold equity positions on Thursday at a level in line with the US regional bank unwind in 2023 and the Covid-19 sell-off in 2020, according to a new weekly report by Morgan Stanley’s prime brokerage divisions.

The bank said that the selling “amounted to the fifth largest day of active net reductions since 2010” and that the magnitude of selling across equities on Thursday was in line with the largest seen on record.

The sectors that experienced the most selling were megacap technology, names exposed to AI across software and semiconductors, high-end consumer, and investment banks. This drove US long/short equity fund net leverage down to an 18-month low of around 42 per cent. 

Thursday was the worst day for US-based long/short equity funds since it began tracking the data in 2016, with the average fund down 2.6 per cent, Morgan Stanley said.

Nintendo has halted US orders of its new Switch 2 console, just two days after it was unveiled, in the wake of the Trump administration’s tariff blitz. 

The Japanese video games group “will not start” accepting advance orders for Switch 2 on April 9 as originally scheduled, “in order to assess the potential impact of tariffs and evolving market conditions”, the company said on Friday.

Nintendo said its scheduled launch date of June 5 was “unchanged”.

During Wednesday’s launch, the Mario and Zelda creator said that its hotly anticipated new console would go on sale for $450 in the US. “Nintendo will update [pre-order] timing at a later date,” the company said.

Donald Trump said that Vietnam’s leader told him the country “wants to cut their tariffs down to ZERO” if they are able to reach an agreement with the US, two days after the American president unveiled a 46 per cent levy on imports from the south-east Asian nation. 

The US president said he had a “very productive call” with To Lam, General Secretary of the Communist Party of Vietnam, and the two would be meeting “in the near future”. 

Vietnam was hit by one of the highest tariff rates when Trump unveiled his sweeping trade policy changes at the White House on Wednesday. 

Donald Trump renewed his calls on the US Federal Reserve to cut interest rates, accusing chair Jay Powell of “playing politics” with monetary policy, as the president’s sweeping tariffs continue to rattle global markets.

“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates”, Trump wrote on his Truth Social platform on Friday.

Powell is due to speak at 11.25am Eastern time in what will be his first public comments since Trump’s “liberation day” tariff announcement on Wednesday.

“He is always ‘late,’ but he could now change his image, and quickly”, Trump said of Powell. “Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months — A BIG WIN for America.” 

Wall Street’s so-called fear gauge on Friday surged to its highest level in seven months as US stocks continued to slide on fears over Donald Trump’s tariffs. 

The Vix index, which tracks the expected turbulence of the blue-chip S&P 500, stood at 44.2 by mid-morning in New York, the highest intraday level since a bout of volatility hit markets last August and far above its long-running average of 20.

Further declines for US stocks in the wake of the Trump administration’s tariff announcements are lining up Wall Street’s main equities indices for their biggest weekly drops in more than five years.

The S&P 500 was down 4.1 per cent during morning trading on Friday, taking the benchmark index’s decline this week to 7.2 per cent. If that is maintained at the closing bell, it would rank as the biggest weekly drop since March 2020.

The Nasdaq Composite is on course for an 8.9 per cent drop this week, which would also rank as its biggest since March 2020 and its third biggest of the past decade.

Global stocks extended their losses on Friday after China retaliated against Donald Trump’s tariff blitz, as investors took fright at the prospect of a full-blown global trade war.

The S&P 500 fell 4 per cent and the tech-heavy Nasdaq Composite lost 4.5 per cent in morning trading on Friday, a day after the steepest decline for Wall Street stocks since the coronavirus crisis in 2020.

Europe’s Stoxx 600 index was down 5 per cent, with losses accelerating after Beijing’s announcement, pulling the Europe-wide benchmark into correction territory. Germany’s Dax tumbled 4.7 per cent. The FTSE 100 slumped 4.8 per cent.

Oil prices continued to fall, with Brent crude down 7.5 per cent at $64.88 a barrel.

“The market is doing one thing: pricing in a global recession,” said Deutsche Bank analyst George Saravelos.

Government bond yields tumbled as investors sought haven assets, with the 10-year US Treasury falling 0.13 percentage points to 3.92 per cent.

Federal Reserve chair Jay Powell will deliver a speech in the US morning. Futures markets are pricing in four quarter-point interest rate cuts from the Fed by the end of this year, up from the three that were expected before Wednesday’s tariffs announcement.

Banks and energy companies were among those hardest hit on Friday as Wall Street stocks continued to slide on tariff concerns and fears of slower global economic growth. 

The KBW Bank index, one of the most widely tracked measures of the performance of the US banking sector, lost 7.1 per cent, with Goldman Sachs, JPMorgan and Morgan Stanley all down more than 6 per cent.

Energy companies GE Vernova, Constellation Energy and Vistra all dropped more than 11 per cent as oil prices plunged. By mid-morning in New York, 469 of the S&P 500’s constituent stocks were in negative territory.

Oil prices slid on Friday as markets deteriorated in the wake of China’s announcement of retaliatory tariffs against the US.

Brent crude, the international oil benchmark, was down 7.3 per cent in mid-morning trade in New York, at $65 a barrel. WTI, the US oil benchmark, was down more, 8.1 per cent lower on Friday morning at $61.65 a barrel. The difference between the two was widening, with US oil falling faster than oil prices in the rest of the world.

Some Irish companies might put workers on reduced hours within days, the head of the country’s biggest employer confederation said, as businesses adjust to US tariffs.

Ibec chief executive Danny McCoy said he had stressed the need for temporary government support for affected workers, during a meeting of business and government leaders on Friday.

“There is immediacy for firms this weekend to know that their demand is likely to drop quite substantially and their workers will need to go on short-time working,” McCoy told reporters, explaining his call for “time-bound” government help. He said fast-moving consumer product industries such as drinks could be affected.

Global stocks extended their losses on Friday after China retaliated against Donald Trump’s tariff blitz, as investors took fright at the prospect of a full-blown global trade war.

The S&P 500 index fell 3 per cent in early trading in New York, a day after suffering its biggest one-day drop since 2020. The tech-heavy Nasdaq Composite fell 3.3 per cent.

The Stoxx Europe 600 index was down 4.3 per cent, with losses accelerating after Beijing’s announcement, pulling the Europe-wide benchmark into correction territory. Germany’s Dax was down 4.1 per cent. The FTSE 100 was down 3.9 per cent.

Oil prices continued to fall, with Brent crude down 7.5 per cent at $64.88 a barrel.

“The market is doing one thing: pricing in a global recession,” said Deutsche Bank analyst George Saravelos.

Government bond yields tumbled as investors sought haven assets, with the 10-year US Treasury falling 0.13 percentage points to 3.92 per cent.

Federal Reserve chair Jay Powell will deliver a speech in the US morning. Futures markets are pricing in four quarter-point interest rate cuts from the Fed by the end of this year, up from the three that were expected before Wednesday’s tariffs announcement.

The dollar was down 0.3 per cent against a basket of peers.

Traders have moved in the past couple of days to price in extra interest rate cuts by major central banks, including the Federal Reserve.

According to levels implied by swaps markets, traders are now pricing in three quarter-point cuts by the end of this year from the Bank of England, from its current rate of 4.5 per cent. They expected two cuts before Trump’s tariffs action.

And for the European Central Bank, traders are now expecting three or four quarter-point cuts from the current 2.5 per cent. Earlier in the week that was two or three cuts.

This has fuelled a rally in UK and Eurozone government bonds, taking the 10-year gilt yield below 4.5 per cent.

Donald Trump has vowed that his policies will never change, two days after announcing sweeping tariffs on trading partners and hours after China retaliated by putting 34 per cent tariffs on imports from the US.

The US president made the promise in an all-caps post on his Truth Social platform on Friday morning.

China has launched an antitrust probe into US chemicals giant DuPont, part of a barrage of retaliatory measures against duties unveiled by President Donald Trump this week.

China’s top market regulator, the State Administration for Market Regulation, announced on Friday night that DuPont China Group, a subsidiary of the US company DuPont, was under investigation for suspected monopolistic practices in violation of China’s Anti-Monopoly Law.

The antitrust probe came as China has announced additional tariffs of 34 per cent on all US imports, tightened export controls on rare earth elements to the US and added a group of American technology companies to its “unreliable entity” list, which bans Chinese suppliers from selling components to them.

The US economy added 228,000 jobs in March, surpassing expectations, in a sign of resilience despite the Trump administration’s sweeping cuts to the federal workforce.

Friday’s figure from the Bureau of Labor Statistics exceeded both February’s increase of 151,000 posts and the 135,000 forecast by economists polled by Reuters.

The so-called Department of Government Efficiency has led President Donald Trump’s charge to axe tens of thousands of positions in an aggressive effort to slim down the federal bureaucracy.

The jobs figure comes as the Federal Reserve considers how to respond to the twin threats of lacklustre growth and persistent inflation, both of which economists say could be exacerbated by the global tariffs unveiled by Trump this week.

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The US dollar has given up the gains it made earlier on Friday, as traders intensify their bets on faster US interest rate cuts to support the world’s biggest economy through the deepening global trade conflict.

Traders are betting that five quarter-point cuts by the Federal Reserve are likely by the end of this year, compared with the three that were expected before Trump’s tariffs move.

This has helped to drag the dollar down against its peers, putting it fractionally lower on the day after Thursday’s 1.7 per cent decline.

Trump’s tariffs on European allies and Canada do not violate Nato’s internal rules on economic relations within the military alliance, its head said on Friday.

Mark Rutte, Nato’s secretary-general, told reporters that he believed the tariffs did not breach the alliance’s Article 2, which states that members “will seek to eliminate conflict in their international economic policies and will encourage economic collaboration between any or all of them”.

Shares in European banks are sliding as investors rush to price in a burgeoning trade war and a hit to the global economy.

Banco de Sabadell fell 12 per cent by lunchtime, while Société Générale was down 11 per cent, and Santander slid 10 per cent.

Reinsurance group Scor also fell 12 per cent, and forklift truckmaker Kion Group was down 13 per cent as exporters struggled.

Oil prices dropped sharply on Friday after China announced retaliatory tariffs on the US, fanning fears of a trade war that would curb global economic growth.

Brent crude, the international benchmark, lost 6.1 per cent to $65.85 a barrel while WTI, its US counterpart, shed 6.6 per cent to $62.53.

The benchmarks have dropped more than 13 per cent since the US announced sweeping tariffs on Wednesday.

Goldman Sachs on Friday cut its price target for the year for Brent by $5 to $62 a barrel and warned that “price volatility is likely to stay elevated on higher recession risk”.

European stocks are now in correction territory, having dropped more than 10 per cent since their high last month, as China’s retaliation on Friday pushes the world towards a full-blown trade war.

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The Stoxx 600 is down 11 per cent from its March high, while Germany’s stock market has fallen 12 per cent since its peak a couple of weeks ago.

China has announced that it will impose additional tariffs of 34 per cent on imports from the US from April 10.

Global stock markets extended their losses on Friday after China said it would impose retaliatory tariffs on the US.

Futures tracking the S&P 500 fell 2 per cent. The Stoxx Europe 600 was down 4.4 per cent in late-morning trading in London, while the FTSE 100 fell 2.6 per cent. Germany’s Dax dropped 4.8 per cent.

Investors continued to sweep into US Treasuries, pushing the yield down 0.15 percentage points on the day to just below 3.9 per cent, the lowest since early October.

China has announced that it will impose additional tariffs of 34 per cent on imports from the US in retaliation for duties of the same amount unveiled by President Donald Trump this week as part of his aggressive trade agenda.

The Ministry of Commerce said on Friday that the tariff would be imposed on all imported goods originating from the US from April 10.

Levies on Chinese exports are set to rise to more than 60 per cent after the US president announced “reciprocal” tariffs of 34 per cent that come on top of existing tariffs.

Beijing denounced the new US duties as “a typical unilateral bullying move”.

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Belgium’s prime minister used a meeting with US secretary of state Marco Rubio to remind him that free trade has “kept the western world secure”.

Bart De Wever said in a statement after meeting Rubio in Brussels that he “expressed our country’s hope that the unfortunate trade dispute between the US and Europe may soon end”.

“Let us maintain and strengthen the Transatlantic partnership and free trade relations which have kept the western world secure and prosperous throughout recent history,” De Wever added.

UK tractor and machinery maker JCB has said it will double the size of a new factory in Texas as it seeks to mitigate the effects of Donald Trump’s tariffs.

The company said on Friday that it would double the size of a planned plant in San Antonio, Texas, to 1mn sq ft after Trump imposed a 10 per cent tariff on imports from the UK.

Lord Anthony Bamford, JCB’s chair, said: “President Trump has galvanised us into evaluating how we can make even more products in the USA.”

Graeme Macdonald, the group’s chief executive, warned the tariffs would have “a significant impact” on its business in the short term, which the factory expansion would help to mitigate.

The pound fell 0.9 per cent on Friday to $1.297, as the global currency market recoils after Thursday’s dramatic sell-off in the dollar.

Currencies that often do worse in times of falling stocks and commodity prices, including the pound and the Australian dollar, have weakened, while the US dollar has stabilised.

The pound is “getting hit by the intensifying sell-off in risk assets”, said Lee Hardman, senior currency analyst at MUFG. “Of the major currencies, it is more sensitive to periods of risk aversion.”

The euro, considered less sensitive to equity falls, is down 0.6 per cent after yesterday’s dizzying rally.

The Australian dollar is down 2 per cent today, its worst fall in two years, to $0.62.

Brent crude fell 3.7 per cent to $67.54 per barrel on Friday morning, its lowest price since August 2021, as traders fret over a slowdown in world economic growth following this week’s US trade tariff announcements.

An unexpected decision by the Opec+ cartel to increase crude output on Thursday has added to concerns that world oil markets will be oversupplied this year.

Brent has now fallen about 10 per cent since Monday. The price remains far below the $90 per barrel fiscal break-even needed by leading Opec+ producer Saudi Arabia to cover its heavy investment needs, according to data from the US Federal Reserve.

Legal & General has warned of an “increased probability” of a US recession over the next 12 months in the wake of Donald Trump’s sweeping new tariffs on imports.

Sonja Laud, chief investment officer of asset management at L&G, told the Financial Times that “the headwinds to growth from trade disruption, uncertainty and reduced confidence” could “have a much larger impact than suggested by estimates based on the direct cost of tariffs alone”.

Laud also warned that the “blanket approach” to tariffs made it more likely that costs would be passed on to consumers rather than absorbed by exporters, boosting inflation.

Ireland’s premier acknowledged that likely US tariffs on the pharmaceutical sector would hit the country’s key industry and slow investment.

Pharmaceutical exports make up 61 per cent of Ireland’s €73bn exports to the US but the sector avoided tariffs in the US president’s initial announcement this week. Levies on the sector are anticipated at a later date.

“New investments are going to slow very significantly,” Taoiseach Micheál Martin told RTÉ radio ahead of a day of meetings between government and labour and business leaders.

But he said reshoring either the pharma, tech or semiconductors industries to the US would be problematic for America, which had a “huge shortage” of human capital. “Reshoring pharma is not something practical or reasonable, and similarly semiconductors.”

A British Treasury minister has denied claims by Donald Trump that UK Prime Minister Sir Keir Starmer was “very happy” to see a 10 per cent tariff slapped on his country’s exports to America.

James Murray said: “We are disappointed that global tariffs have been introduced. We know that they will have an impact on Britain and around the world.”

Trump told reporters on Air Force One that he thought Starmer was “very happy about how we treated them with tariffs”. The UK was hit with the lowest baseline tariff, along with many other countries, and half the 20 per cent rate applied to the EU.

Murray said Britain’s priority now was to negotiate a trade deal with Trump “at pace”. He told the BBC: “We want to see the additional tariffs removed.”

Switzerland’s President Karin Keller-Sutter said the country was considering its next steps and would act “quickly” after the small Alpine country was hit with a 32 per cent tariff on Swiss exports to the US.

Keller-Sutter said in a post on X late on Thursday night that “adherence to international law and free trade remained core values”.

The tariffs for Switzerland are far higher than the 20 per cent faced by the EU and many other countries.

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The US-Canada relationship will “never be the same again” after Donald Trump’s trade tariffs, Canada’s foreign minister Mélanie Joly said on Friday.

“And this is my message to Europeans: the relationship will never be the same. [The US] wants to do things differently,” Joly told reporters as she arrived at a meeting of Nato foreign affairs ministers in Brussels.

President Trump “respects strength”, Joly said, referring to Canadian counter-tariffs imposed as a way to reach a deal. “We are putting maximum pressure on the Trump administration, and at the same time we are finding off-ramps.”

She added Canada and Europe needed to send a message to “the American people” to convince Trump to change track.

Prime Minister Shigeru Ishiba described the imposition of across-the-board US tariffs as a “national crisis” as bond yields logged one of their biggest weekly drops in three decades and Tokyo stocks endured their worst five-day run since the start of the Covid-19 pandemic.

Ishiba told parliament on Friday that the government was discussing countermeasures against the 24 per cent levy that Donald Trump’s administration has calculated for Japan — moves, he said, that could include retaliatory tariffs or mounting an action via the World Trade Organization.

In a rare meeting of a type generally reserved for natural disasters and other significant crises, Ishiba is due to meet leaders of the main opposition parties later on Friday for joint talks on how Japan will address the tariffs.

French finance minister Éric Lombard said that Europe would enact a “proportionate response” to Donald Trump’s tariffs aimed at bringing the US to the “negotiating table”.

Lombard told French broadcaster BFMTV that the EU should not “reply with the same weapons” as the US, as reciprocal tariffs on US imports to Europe could hit European consumers.

Instead, Lombard said Europe was working on a package of response measures that could go “beyond tariffs”, including taxes or regulations to target “some businesses” but not “entire sectors”.

European stock markets opened lower on Friday after a brutal sell-off in the previous session.

The region-wide Stoxx 600 fell 1 per cent in early trading down, after Thursday’s 2.6 per cent fall.

Trevor Greetham, head of multi-asset at Royal London Asset Management, said investors had been unnerved by the tariffs assault, creating a “loss of confidence” in US policymaking. “If they are willing to set tariffs on what seems a really arbitrary and spurious calculation basis, what else are they willing to do?”

Futures markets are pointing to fresh drops on Wall Street today, but smaller declines compared with the previous session when US equities suffered their worst drop since 2020.

The blue-chip S&P 500 index is set to open 0.4 per cent lower, and the tech-heavy Nasdaq 100 index 0.3 per cent down, according to current levels.

Australia and New Zealand’s exposure to China’s economy, which is facing huge new tariffs, is causing concern among investors, said Tony Sycamore, a strategist at IG Australia.

The tariffs were a “huge burden for the Chinese economy”, Sycamore said. “If they devalue their currency that will flow through to the Aussie dollar.”

The two countries’ stock markets and currencies sold off on Friday.

The currencies of Australia and New Zealand plunged on Friday as Donald Trump’s sweeping tariffs raised alarm over a global slowdown in trade and economic growth. 

The Australian dollar, among the world’s most traded currencies, weakened 1.4 per cent to A$0.624 per US dollar, while the New Zealand dollar fell 1.2 per cent to NZ$0.572.

The two economies are highly exposed to global demand, with Australia a key supplier of commodities to China and other emerging markets.

Fears of a slowdown in global trade have raised bets that the two countries’ central banks will cut rates sooner than expected.

Futures markets are pricing in a 25 basis point cut by the Reserve Bank of Australia at its next meeting in May despite a dovish hold this week.

Australia’s S&P/ASX 200 stock index dropped 2.4 per cent on Friday.

Vietnam has asked the US to postpone the 46 per cent tariff imposed on the south-east Asian country by the Trump administration and engage in negotiations.

The manufacturing powerhouse, which has been slapped with one of the highest tariff rates, believes that “there is still room for discussion and negotiation” between the two sides, according to a government statement on Friday.

The tariffs would have a “negative impact” on Vietnam’s exports, the government said, adding that the ministry of industry and trade had sent a diplomatic note to the US asking for the postponement.

A small business in Florida has sued the US government to block tariffs on China, the first legal challenge against the flurry of duties rolled out by Donald Trump.

Simplified, which sells planners and relies on Chinese suppliers, on Thursday filed a complaint accusing the Trump administration of illegally using emergency powers to impose tariffs on all imports from China.

In February and March, Trump levied a total of 20 per cent additional tariffs on China, arguing that threats stemming from immigration and illicit fentanyl constituted a “national emergency” under the International Emergency Economic Powers Act of 1977.

The statute “does not authorise the President to impose tariffs”, said the New Civil Liberties Alliance, which is representing Simplified.

The lawsuit did not capture Trump’s “reciprocal” duties announced on Wednesday.

Japanese equities continued Thursday’s global sell-off by opening sharply lower on Friday morning, with the Topix falling 3.2 per cent in early trading to hit the index’s lowest level since August.

The drop was led by huge falls for Japan’s major banking groups. Shares in MUFG, Sumitomo Mitsui Financial Group and Mizuho tumbled 10.5 per cent, 9.7 per cent and 11.6 per cent respectively.

Intensifying fears of a global recession, precipitated by the severity of Donald Trump’s tariffs, continued to hammer Japanese exporters.

Yields on the 10-year benchmark Japanese government bond dipped to 1.3 per cent, echoing the global investment shift into havens. The yen edged up against the dollar to ¥145.9, its strongest level since October.

Nissan has stopped taking further orders of Mexican-built Infiniti SUVs destined for the US market, in the second major sign of disruption to the auto industry off the back of Donald Trump’s tariffs.

The Japanese automaker said on Friday that additional US orders of its Infiniti QX50 and QX55 produced at its Compas plant in Mexico would be put on hold. The 25 per cent auto tariffs that took effect on Thursday mean the model is no longer profitable.

The move follows Jeep and Chrysler maker Stellantis on Thursday furloughing 900 US workers at five plants in the US and temporarily shutting down production in Canada and Mexico.

The Trump administration’s new trade restrictions represent a “significant risk” to the global economic outlook “at a time of sluggish growth”, the head of the IMF has warned.

Managing director Kristalina Georgieva said the Washington-headquartered agency was still assessing the macroeconomic implications of the tariff plans Donald Trump announced this week, but that “it is important to avoid steps that could further harm the world economy”.

“We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty,” she said in a statement on Thursday afternoon.