Share prices plunged across the world on Monday as Donald Trump doubled down on trade tariffs despite warnings from economists of the growing risk of a recession in the United States and around the globe.
The president dismissed market turmoil over his plans – saying “sometimes you have to take medicine to fix something” – and threatened to raise import fees even further against China unless Beijing dropped its retaliatory measures.
But banking giant Goldman Sachs and JP Morgan, the US’s largest investment bank, warned the escalating trade war risked tipping the US and other countries into recession.
Britain’s FTSE 100 index dived to a one-year low after Hong Kong’s Hang Seng index fell more than 13 per cent, and there was similar turmoil on Wall Street.
Sir Keir Starmer pledged to “shelter British business from the storm” as he called for “cool heads” to prevail. Speaking at a Jaguar Land Rover plant in the West Midlands, the prime minister said: “These are challenging times, but we have chosen to come here because we are going to back you to the hilt.”
Land Rover boss Adrian Mardell said his company faced “a significant threat” from the US tariffs.
Jamie Dimon, chief executive of JPMorgan Chase and one of the most prominent figures in corporate America, warned of rising inflation and the risk of recession.
“Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,” he said. “The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse.”
JPMorgan’s economists have raised the risk of a US and global recession this year to 60% from 40%.
And Bill Ackman, a billionaire hedge fund manager and backer of Trump, urged the president to pause tariffs or risk “a self-induced economic nuclear winter.”
As a slew of US tariffs came into effect around the world, including 10% on all imports from the UK, Trump spent the weekend in Florida playing golf.
The president said overnight that he did not want global markets to fall but is unconcerned by volatility, claiming that leaders around the world are “dying to make a deal” with Washington.
Later, he threatened additional tariffs on China that, if implemented, would reach a combined figure of 104%.
European Commission president Ursula von der Leyen said Europe “stands ready to negotiate with the United States” but warned that “we are also prepared to respond through countermeasures and defend our interests.”
The prime minister called for “cool heads” as global markets plunged.
He said his car factory visit was a “statement of intent”, showing the government’s support for an industry which has been hit with a higher 25% tariff by Mr Trump.
He added: “This is a moment for cool heads, nobody wins from a trade war, you know that. But it’s also a moment for urgency, because we’ve got to rise together as a nation to the great challenge of our age – and it is the great challenge – which is to renew Britain so we’re secure in this era of global instability.”
Sir Keir said “this is not a passing phase” and was a “completely new world”, with the economic turbulence hot on the heels of defence and security instability triggered by the war in Ukraine.
While Sir Keir has said nothing is off the table, one former ambassador to Washington said the UK should have gone further with its threats.
“I think it’s right that we should say we’re going to think about retaliation. We might indeed have said that a little bit earlier on”, Sir Nigel Sheinwald said. “I think it’s always wrong to take that off the table or sound as if you don’t mean it, because in the world of trade policy and trade negotiators, this is a tough world where you’ve got to brandish those weapons and seem as though you’re prepared to use them.”
In a move to help the car industry, Sir Keir on Sunday announced extra flexibility in the zero emission vehicle (Zev) mandate as the automotive industry phases out petrol and diesel cars an vans.
Sales of hybrid cars which cannot be plugged in to charge will be allowed to continue until 2035, although the government confirmed the sale of purely petrol or diesel-powered cars will be banned from 2030.
Reform UK leader Nigel Farage, who has long supported Mr Trump, said he thought the tariffs were “a bit excessive”.
