Trump tariffs day 2 as it happened: US stocks fall the most since pandemic; S&P 500 sheds $2.5tn in historic market cap wipeout

A global equity market sell-off deepened on Friday, with Asian markets falling and those in Europe and the US set to extend declines as investors moved into government bonds as a refuge from Donald Trump’s tariff blitz.

Japan’s Topix was down 4.5 per cent and Australia’s S&P/ASX 200 index retreated 2.2 per cent, while South Korea’s Kospi dropped 1.7 per cent.

“Liberation day turned into liquidation day”, said Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management.

Government bond yields dropped as investors rotated into haven assets, with the US 10-year Treasury falling past 4 per cent. Yields on 10-year Japanese government bonds dropped 0.16 percentage points to 1.2 per cent.

Futures markets indicated European and US markets were set to open down. Investors are looking forward to a non-farm payrolls release, which economists surveyed by Reuters estimate at 135,000 jobs added. Federal Reserve chair Jay Powell will also deliver a speech in the late morning.

The dollar weakened 0.4 per cent while the yen strengthened 0.3 per cent to ¥145.7, its highest level since October.

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 statement on a government website on Friday.

The tariffs will have a “negative impact” on Vietnam’s exports, the government said, adding that the ministry of industry and trade has 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 authorize the President to impose tariffs”, said the New Civil Liberties Alliance, which is representing Simplified.

The lawsuit did not capture the reciprocal duties announced on Wednesday.

Japanese equities continued the previous day’s global sell-off by opening sharply lower on Friday morning, with the Topix falling 3.2 per cent in early trading to hit its 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 the US tariffs announced by Donald Trump, 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 the 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 the 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 no longer make the model profitable.

The move follows Jeep and Chrysler maker Stellantis a day earlier furloughing 900 US workers at five plants in the US and temporarily shutting production down 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.

Argentina has said it will make “adjustments” to its policies affecting trade with the US after its foreign minister Gerardo Werthein met US trade representative Jamieson Greer on Thursday.

Werthein’s office said it had analysed “issues identified” by the US trade office, whose annual report released on March 31 noted trade barriers in Argentina’s protectionist economy, including tariffs and strict customs regulations.

“The corresponding adjustments are already in the process of being implemented and are expected to be finalised in the coming days,” Werthein’s office said.

Argentina’s libertarian President Javier Milei hopes to meet Donald Trump at an event in Mar-a-Lago on Thursday.

Equities investors sought the relative safety of defensive sectors, but there were ultimately few places to hide as four in five S&P 500 stocks closed lower on Thursday.

The index’s best performer was Lamb Weston, a top supplier of french fries to McDonald’s. Shares in the frozen food group, which is arguably at the more defensive end of consumer companies, closed 10 per cent higher after reporting forecast-beating results.

One of Wall Street’s worst performers was upmarket furniture retailer RH, whose shares shed a record 40 per cent.

The company on Wednesday afternoon reported weaker than expected earnings and its conference call with analysts coincided with Donald Trump’s tariff announcements, which could hit the group’s overseas suppliers.

RH’s shares immediately began to sell off, startling chief executive Gary Friedman.

“Where is our stock now?” he asked at one point during the call. “Oh really? Oh shit. OK. I just looked at the screen. I hadn’t looked at it.”

S&P 500 stocks collectively shed about $2.5tn in market capitalisation on Thursday in response to Donald Trump’s sweeping new tariff plan, marking one of the biggest one-day wipeouts in value on record for Wall Street’s benchmark index.

The figure, according to Bloomberg and FactSet data collated by the Financial Times, was the biggest since the early days of the Covid-19 pandemic in 2020.

Thursday’s decline was led by Apple, the world’s biggest listed company, which shed about $311bn in market value, according to Bloomberg data.

Amazon’s market capitalisation declined by $186bn, while Meta’s fell by $132bn, the second-biggest valuation wipeouts on record for both stocks. Nvidia shed $210bn, the stock’s seventh-biggest decline on record.

The Nasdaq Composite shed more than $1tn in market value, among the biggest one-day valuation drops for the tech-heavy index.

President Donald Trump said the market turmoil was “what is expected” following his tariff announcement, as he likened the US economy to a sick patient that has undergone surgery.

“The economy had a lot of problems . . . It was a sick patient. It went through an operation. It’s going to be a booming economy. It’s going to be amazing,” he said aboard Air Force One on Thursday.

“The operation is over. And now we let it settle in.”

Donald Trump said the US would “soon” slap tariffs on chips and pharmaceuticals, both of which were exempt from the new levies announced on Wednesday.

“The chips are starting very soon,” the president said on Thursday, adding that tariffs on drugs would come “some time in the near future. It’s under review right now.”

Trump also said he spoke to chief executives from the car industry but declined to specify who.

Donald Trump said foreign governments were trying to negotiate with the US and that he was willing to make deals with other countries “as long as they are giving us something” good in return.

“Every country is calling us. That’s the beauty of what we do. We put ourselves in the driver’s seat. If we would have asked these countries to do us a favour, they would have said no. Now they will do anything for us,” the president said aboard Air Force One on Thursday.

Trump said Beijing could end up telling Washington it would approve a deal to sell TikTok’s US operations to American owners if his administration lowers the tariffs on China.  

“The tariffs give us great power to negotiate . . . Now we’re taking it to a whole new level.”

The US economy has “entered a period of uncertainty” as investors fret about the prospect of a full-blown global trade war, a top Federal Reserve official has warned.

“My baseline forecast is that US economic growth will slow moderately this year, with the unemployment rate picking up a bit, while inflation progress will stall in the near term, in part because of tariffs and other policy changes,” Federal Reserve governor Lisa Cook said on Thursday.

Tariffs typically raise prices for affected goods, which in turn temporarily pushes up the overall inflation rate. “Such scenarios, with higher initial inflation and slower growth, could pose challenges for monetary policy,” she continued.

Cook said she believed monetary policy was still “well situated” to respond to developments and that “we can afford to be patient but attentive”.

Italian Prime Minister Giorgia Meloni sought to calm her compatriots alarmed over Donald Trump’s new tariffs on imports from the EU, saying the US policy was “not a catastrophe” and Italy would continue to sell its wares to US consumers.

“I think the US choice was a mistake . . . but we should not fuel alarmism in these hours,” Meloni told state broadcaster Rai after being asked to “reassure” Italians panicked about the impact of Trump’s tariffs. 

While she acknowledged that tariffs were “another problem to resolve”, she cautioned against harsh retaliation. “I am not convinced that the best choice is to respond to tariffs with other tariffs.”

Meloni said she would meet members from affected economic sectors next week to discuss Italy’s response to the tariffs.

US President Donald Trump insisted the stock market would “boom” as a result of his sweeping tariffs, in his first public comments since upending the global trade order on Wednesday and unleashing turmoil across markets.

“I think it’s going very well,” Trump told reporters on Thursday as he boarded Marine One at the White House to begin travelling to Florida.

“The markets are going to boom,” and “the country is going to boom”, Trump said. 

The US would “have six or $7tn coming into our country”, he added. He continued making his claim that US trading partners “have taken advantage of us for many, many years”.

The “growth shock” now facing the US means the Federal Reserve “is going to be in some level of rate cutting mode this year, beyond what was expected six weeks ago or two months ago”, according to Ashish Shah, chief investment officer of public investing at Goldman Sachs Asset Management.

Speaking at a GSAM conference on Thursday, Shah said: “What we’ve seen in the bond market is an appropriate pricing of the Fed opening up the window, or the market saying ‘the Fed may actually have to ease more’.” 

That viewpoint had been “validated” by recent economic data, he added, but “this additional level of tariffs that we’ve seen over the last 24 hours relative to what was expected . . . opens itself to more”.

Market pricing on Thursday indicated that investors were pricing in between three and four quarter-point interest rate cuts in 2025, up from roughly three a day earlier.

US stocks tumbled on Thursday while the dollar sank, as investors bet that Donald Trump’s sweeping tariffs would result in pain for the US economy.

Some content could not load. Check your internet connection or browser settings.

The S&P 500 was down 3.8 per cent. The Nasdaq Composite tumbled 4.9 per cent, dragged down by an 8.5 per cent fall for index heavyweight Apple.

The dollar was down 1.7 per cent against a basket of rivals.

Brent crude, the global oil benchmark, was down 6.8 per cent at $69.86 a barrel. WTI, the US benchmark, fell 7.1 per cent to $66.59 a barrel.

“The collapse is a loss of confidence in dollar-denominated assets in general,” said Francesco Pesole, a currency strategist at ING. “It’s a vote of no confidence on 100 days of Trump.”

Robert Tipp, PGIM’s head of global bonds, said markets were “very complacent” but now they are going into “spiral mode of trading toward a recession until they have probable cause to stop”.

The moves came after Trump said a levy of 10 per cent would apply to nearly all US imports from April 5, and that dozens of countries, including China, would be subject to further “reciprocal” tariffs from April 9.

European stocks were also hit on Thursday, with the continent-wide Stoxx Europe 600 index closing 2.6 per cent lower, led by a big sell-off in shares of export-focused companies.

“THE OPERATION IS OVER! THE PATIENT LIVED, AND IS HEALING,” Trump wrote on Thursday on his Truth Social platform.

“THE PROGNOSIS IS THAT THE PATIENT WILL BE FAR STRONGER, BIGGER, BETTER, AND MORE RESILIENT THAN EVER BEFORE,” he added.

Canada’s Prime Minister Mark Carney said there had been “so many violations” of USMCA that the free trade agreement with Mexico and the US needed “a renegotiation”.

Carney said the “US is absolutely our ally” and Canada’s “most important security ally” even with tariffs but the commercial relationships needed to be redefined.

Carney said “the competitive threat in North America is from Asia not within North America”.

Carney said “80 cents on every dollar that we spend on military equipment, in that broadest sense, goes to the United States. In the current stance of the relationship, that doesn’t make sense.”

Mexican President Claudia Sheinbaum said that companies affected by Trump’s tariffs could invest in Mexico to take advantage of its “preferential” trade conditions.

“For example a German automaker can take advantage of this because if they export from Germany or somewhere else, there wouldn’t even be this small discount,” she said, referring to the tariff relief for US content in auto exports from Mexico.

Mexico’s Economy Minister Marcelo Ebrard on Thursday said the deal his country received relative to the rest of the world was “preferential treatment” and proof that Sheinbaum’s “strategy worked”.

“Today this is already an important advantage, because it means that here things are better than in other parts of the world,” he said.

Ebrard said that over the next 40 days or so Mexico would negotiate to improve the deal it and others have in the auto industry and steel.

The World Trade Organization has warned new US tariffs could trigger a 1 per cent contraction in global merchandise trade volumes this year. 

WTO director-general Ngozi Okonjo-Iweala said the measures announced on April 2, alongside others introduced since January, “will have substantial implications for global trade and economic growth prospects”.

“Our initial estimates suggest these actions could reduce global merchandise trade volumes by around 1 per cent in 2025, a downward revision of nearly four percentage points from previous forecasts,” she said on Thursday. “I’m deeply concerned about the potential for escalation into a tariff war, with retaliatory measures leading to further declines in trade.”

Canada’s Prime Minister Mark Carney has announced 25 per cent tariffs on vehicles imported from the US that are not compliant with the United States–Mexico–Canada Agreement.

“While it is a tragedy we must respond,” he said. 

Carney said US tariffs on Canada’s auto sector ended the auto-pact relationship between the two countries that was signed in 1965.  

Canada and Mexico and the US renewed their trade agreement, known as USMCA, in 2020 under the Donald Trump’s previous administration. 

“Our tariffs, though, unlike the US tariffs, will not affect auto parts because we know the benefits of our integrated production system,” he said on Thursday.

Carney said he is speaking to counterparts in Europe such as Germany’s Chancellor Olaf Scholz to develop reliable partnerships in response to the US tariff plan. 

Bitcoin’s slide following Donald Trump’s tariff announcement has continued, pushing the price of the world’s largest cryptocurrency below $82,000. 

The bitcoin price briefly rallied on Wednesday in the run-up to the president’s speech, peaking just under $88,000, but it plunged once details of the new levies on dozens of US trading partners became clear. 

Bitcoin surged following Trump’s election on the belief that the Republican president would usher in pro-crypto policies and personnel, but it is now down more than 12 per cent since January 1. 

Ireland, which Donald Trump last month said “took our pharmaceuticals companies and other companies”, reported a first-quarter jump in corporation tax receipts driven by American multinationals one day after the US president unveiled his global trade tariffs.

Corporation tax receipts hit €4.8bn in the first quarter, an increase of €2.3bn on the same period last year. 

The total was inflated by the inclusion of proceeds from the payment of Apple back taxes that the European Court of Justice ordered the US tech giant to pay Ireland. Without the Apple tax, first-quarter corporation tax was €3bn, up €0.6bn on the first quarter of 2024.

US bank stocks fell sharply on Thursday on rising concerns that Donald Trump’s tariffs will plunge the world’s largest economy into a recession.

The KBW Bank index, one of the most widely tracked measures of the performance of the US banking sector, dropped 8.7 per cent, on track for its worst day since June 2020, according to FactSet data.

JPMorgan fell 6.5 per cent, Morgan Stanley lost 8.2 per cent and Goldman Sachs fell 8.1 per cent. Banks’ earnings season begins late next week.

French President Emmanuel Macron said all options were on the table and urged companies to pause investments in the US as the country works with the European Commission to counter US President Donald Trump’s 20 per cent tariffs on the EU’s exports.

“Nothing is excluded,” Macron said on Thursday at the Élysée, citing options such as reciprocal tariffs, the activation of the bloc’s anti-coercion instrument and measures targeting the US tech sector.

He called on industries “to remain united, to be determined” rather than to make one-off deals or announce investments in an attempt to negotiate exemptions with Washington. 

“What would the message be of having major European actors investing billions of euros in the American economy at a time when they are hitting us?” Macron said. “We need to have solidarity.”

Stellantis said it would furlough 900 workers at five plants in the US as a result of a temporary shutdown of production in Canada and Mexico in response to Donald Trump’s tariffs.

The temporary job cuts came shortly after the US president imposed a 25 per cent tariff on foreign car imports, a move Trump has said would bring manufacturing back to America.

The manufacturer of the Jeep, Ram and Chrysler brands said its power train and stamping facilities in the US would be affected as they provide parts to the suspended assembly plants in Canada and Mexico.

Carmakers and consumer goods producers are among the hardest hit in the high-yield credit market after Donald Trump’s announcement of a sweeping slate of tariffs on US trading partners. 

The drag on those sectors is “material enough to be felt, especially if you’ve got the wrong exposures, but it’s not going to break the market”, said Andrzej Skiba, head of BlueBay US fixed income at RBC GAM. 

Pressure on riskier credit is likely to continue, especially if companies with relatively high leverage react to the new tariffs by imposing lay-offs and weakening US consumer strength, Skiba said. Other countries may retaliate with fresh trade levies of their own in the coming weeks, he added. 

Hedge fund billionaire Bill Ackman said countries that retaliate against Donald Trump’s tariffs or wait to make a deal with the US president “will regret that they were not part of the early deal group or worse”. 

The president’s son, Eric Trump, similarly encouraged countries to negotiate a trade deal with his father. “I wouldn’t want to be the last country that tries to negotiate a trade deal with @realDonaldTrump,” he said on X. 

“What we are seeing is a wholesale repricing of credit risk,” said John McClain, portfolio manager at Brandywine Global Investment Management, as spreads on US corporate junk bonds widened sharply on Thursday.

“Markets hate uncertainty, and this is an exacerbation of uncertainty.”

The impact of Donald Trump’s tariffs “feels to me somewhat similar to what we saw during the Silicon Valley Bank crisis a couple of years ago”, said McClain. “We are certainly seeing a market that is looking for liquidity.”

Still, he noted, investors were “differentiating across credit risk here”, with higher-quality companies less exposed to tariffs “down less than the rest”.

US small cap stocks, which are regarded as being more exposed to the health of the domestic economy, tumbled into a so-called bear market on concerns that Donald Trump’s tariff’s will curtail economic growth.

The Russell 2000 was down 5.6 per cent in morning trading. That brought it to a level 20.9 per cent below its recent high close in November, surpassing the 20 per cent threshold that typically defines a bear market.

Domestically focused smaller US companies are particularly exposed to slowing economic growth. The Russell 2000 had surged in the weeks following the US presidential election on hopes that smaller companies would gain from Republican policy priorities such as corporate tax cuts and deregulation. That rally has since reversed direction and the index is now at a 14-month low.

Growth in the vast US services sector expanded at its slowest pace in nine-month low and employment faltered in March, adding to concerns that Donald Trump’s trade policies are weighing on the world’s largest economy. 

The Institute for Supply Management’s non-manufacturing purchasing managers’ index dropped more than expected to 50.3 in March, down from 53.5 in February. Sustained declines in the services industry, which makes up more than two-thirds of the economy, will raise fears of stagflation.

The ISM’s gauge of employment dropped into contraction, at 46.2, down from 53.9 in February, while the pace of new orders was slower.

Polish Prime Minister Donald Tusk warned on Thursday that the country’s GDP growth was likely to be reduced by 0.4 per cent as a result of new US tariffs. 

The foreseen impact on one of the EU’s fastest growing countries, equivalent to at least $2.6bn of the Polish economy, will deal “a severe and unpleasant blow, because it comes from the closest ally, but we will survive it”, Tusk said on X. He also announced an emergency meeting with representatives of the Polish automotive industry to discuss the issue. 

Tusk earlier called for “really and truly reciprocal tariffs” between the US and Europe after Donald Trump announced his measures. 

The fall in US stocks has been particularly painful for investors who had expected a softer, negotiated outcome to Donald Trump’s trade war, allowing Wall Street to regather momentum after recent falls.

“We got caught back-footed,” said Dan Scott, head of multi-asset at Vontobel Asset Management, which has now exited its overweight bet on US stocks due to the rising risks to domestic growth. “For the next couple of quarters, [US stocks] are going to have some pain to go through.”

Scott argued that the dollar’s fall at a time of stress was “not part of the playbook” and that there was “definitely to a degree, a de-dollarisation” happening as investors view dollar assets more dimly due to worries over US policymaking.

The 10-year Treasury yield, which serves as the benchmark for assets around the globe, dipped below 4 per cent for the first time since October 2024, suggesting investors were pricing in an increased chance of a US recession.

The 10-year yield, which moves with growth expectations, fell to a low of 3.996 per cent in mid-morning trade in New York, before quickly reverting back to 4.02 per cent, down 0.11 percentage points on the day.

The 10-year yield undergirds pricing on assets around the world and chaos in the Treasury market can quickly spill into other asset classes.

The EU still wants to avoid a “clash” with the US, the EU’s competition chief Teresa Ribera said at an event in Washington D.C. 

The EU will remain “firm and open”, Ribera said, adding that there was still room to “solve any kind of misunderstandings” with the US.

But the EU is also ready to react if necessary, Ribera said. 

The European Commission is looking into using its “anti-coercion instrument” against Washington. The tool allows the EU’s executive arm to impose restrictions on trade in services if it determines that a country is using tariffs on goods to force changes in policy.

But the Spanish politician circumvented a question on whether that anti-coercion instrument would be used for a European reaction to Donald Trump’s tariffs announcement.

Consumer cyclicals and tech stocks fell furthest early on Thursday as Donald Trump’s tariffs rocked US equities markets.

Nine of the S&P 500’s 11 sectors were in negative territory, with 320 stocks down on the day.

Sportswear group Nike dropped 11.1 per cent, asset management group Apollo Global Management lost 11 per cent and United Airlines fell 9 per cent shortly after the market opened. Apple fell 9.3 per cent, Bank of America lost 8 per cent, Morgan Stanley dropped 8.2 per cent and chipmaker Arm Holdings fell 6.6 per cent.

Footwear group Deckers Outdoor lost 14 per cent while software group Dell shed 13.9 per cent.

Apple lost more than $250bn in market value on Thursday, making it one of Wall Street’s biggest casualties of Donald Trump’s tariff blitz despite chief executive Tim Cook’s efforts to court the administration.

Shares in the iPhone maker were down as much as 8.5 per cent as trading opened in New York on Thursday, enough to reduce its market capitalisation from $3.37tn to $3.12tn.

Trump hit all of Apple’s biggest supplier and manufacturing hubs in Asia — including China, Taiwan, India and Vietnam — with huge new tariffs on goods imported to the US.

Read more here.

Donald Trump’s tariffs on EU goods announced in recent days would generate €81bn in US revenue assuming trade volumes were unaffected, according to calculations by the European Commission.

A senior commission official said 70 per cent of EU exports to the US would be covered by tariffs on steel, aluminium, cars and the 20 per cent universal measure unveiled on Wednesday.

That is compared with €7bn before the moves. “It is evidently a massive increase,” the official said.

French Prime Minister François Bayrou on Thursday described US President Donald Trump’s raft of tariffs as a “catastrophe” for the US and the global economy.

“This decision is a catastrophe for the world economy. It is a huge challenge for Europe. I believe it is also a catastrophe for the US and for American citizens,” he said.

“It is up to us to invent the new world that must come . . . Europe must finally accept to exist as a power capable of defending itself [while] thinking about what the future of a different relationship [with the US] and a different economy will be,” he said. “These are very serious times.”

Tariffs unveiled by US president Donald Trump would “massively damage” Germany’s economy and could lead it to contract this year, according to the Munich-based Ifo Institute for Economic Research.

“Some key industries such as automotive and mechanical engineering would be particularly hard hit,” it said in a statement on Thursday.

“As Germany’s economy is already stagnating, it is possible that the US tariffs will push economic growth in Germany below zero,” said Ifo president Clemens Fuest.

There were two bright spots in global financial markets amid the wreckage inflicted by President Donald Trump’s tariff announcements: the euro and US Treasury bonds.

Traders piled into the European currency and into US sovereign debt on Thursday morning as they sought refuge in traditional haven investments.

The benchmark 10-year Treasury yield, which moves with growth expectations, was down 0.11 percentage points to 4.02 per cent, its lowest level since October 2024. Yields move inversely to prices.

The two-year yield, which moves with interest rate expectations, was down 0.12 percentage points to 3.74 per cent, also its lowest since October 2024.

In early New York trading, the euro was up 2 per cent, having earlier in the day hit its highest level since October 2024.

The US trade deficit was $122.7bn in February, the second largest on record, as companies continued to frontload imports ahead of the expected impact of tariffs.

Data published by the Bureau of Economic Analysis on Thursday showed that the US imported $401.1bn in goods and services in February, up almost a fifth compared with the same month in 2024. Exports, at $278.5bn, were higher than January.

February’s trade deficit came in slightly below January’s all-time high of $130.7bn but both figures were significantly above the long-term average, suggesting that the uncertainty surrounding Donald Trump’s trade policies had triggered a rush to secure goods and materials.

The market meltdown in response to President Donald Trump’s tariffs extended to US corporate junk bonds on Thursday morning.

The high-yield credit default swap index, which measures credit risk in the US junk bond market, rose to its highest level since December 2023 as investors bet on increased chances of defaults at companies with lower credit ratings. The spread rose by 19 basis points from yesterday’s close to a high of 406bp.

The high-yield CDS index is closely correlated with the US equity market, which was also hit in pre-market trading.

Spain’s Prime Minister Pedro Sánchez has pledged to cushion the impact of the new US tariffs by providing €6bn of new lending and loan guarantees to affected businesses.

Decrying US President Donald Trump’s return to “19th century protectionism”, Sánchez said the new borrowing facilities would be part of a broader €14bn support package including repurposed existing funds.

Sánchez promised to provide €6bn of state-backed loans via a public lending agency and financial institutions. Spain will also help companies at risk of a “tariff shock” by giving them €5bn of post-pandemic EU recovery funds and €2bn of redirected credit and export insurance.

Ireland wants the EU not to apply digital services taxes in retaliation for Donald Trump’s tariffs, a move that could hit its huge tech sector.

“We do not favour a digital service tax,” Taoiseach Micheál Martin told reporters as he appealed for negotiation in the interests of world trade. He called for a “calculated, calibrated response . . . not to bring more damage upon the European economy and European citizens”.

Ireland, which is home to large US tech and pharma companies, is vulnerable to any US tariffs on pharmaceuticals or EU retaliation targeting tech.

Booming corporation taxes from such companies have delivered a huge budget surplus for Dublin. Pharma exports were left out of Trump’s tariffs for now but Ireland believes they may come later.

Donald Trump’s so-called reciprocal tariffs are based on a simple formula: for each country or bloc, the US goods trade deficit is divided by the total goods imports in 2024, and then divided by two.

A 10 per cent global baseline tariff is also applied, ensuring that even countries the US runs a surplus with are hit.

The US trade representative argued that this formula, which has been viewed as bizarre by economists, would drive bilateral trade deficits to zero.

Two countries have tariffs notably below that given by the formula — Russia and Afghanistan. Based on FT calculations, they should have tariffs of 41 per cent and 24 per cent, respectively, but it appears they will only be subject to the global 10 per cent rate.

Some content could not load. Check your internet connection or browser settings.

Donald Trump’s tariffs will hit approximately €380bn in exports — about 70 per cent of all EU exports to the US — EU commissioner Michael McGrath said.

Speaking to reporters in Dublin, after talks with Taoiseach Micheál Martin, the commissioner for democracy and justice said the EU wanted now to negotiate “but we also stand ready to respond . . . in the event negotiations fail”.

McGrath said €290bn in EU exports would face Trump’s reciprocal tariffs — which the US president set at 20 per cent for the EU. A further €26bn were hit by Section 232 tariffs on steel and aluminium and €67bn by Section 232 tariffs on cars and car parts.

“This is not the end of the story. It’s not too late for negotiations,” Martin said.