President Trump unveiled his “liberation day” tariff regime on Wednesday, promising American “economic independence” from the global market.
This is what happened next.
9pm (UK time) on Wednesday
Amid cheers from rows of seated steel and automotive workers in hard hats and high-vis uniforms and “hail to the chief” from loudspeakers, President Trump finally unveiled his long-vaunted “Liberation Day” in the White House rose garden.
With the world watching, the president announced America’s “declaration of economic independence” from “foreign scavengers” during a 50-minute speech. Holding aloft a reciprocal tariffs chart from his lectern, in political theatre more akin to a primetime game show, Trump unveiled sweeping, steeper-than-expected goods import tariffs across the world. They ranged from more than 40 per cent on some Asian economies to 20 per cent on the European Union and a base universal rate of 10 per cent on the UK.
On Wall Street, the leading stock indices had closed the day higher shortly before Trump began his presentation in volatile trading, but the futures markets soon turned negative. S&P 500 futures fell 1.6 per cent as Trump spoke, while Nasdaq futures fell 2.4 per cent.
10pm
The shock waves through global financial markets and boardrooms and which beset global leaders were swift. US Treasury yields and the dollar weakened, while equity futures reversed course and fell. The benchmark US ten-year Treasury note yield fell 2.9 basis points to 4.127 per cent. Oil benchmarks retreated despite tariff exemptions on imports of oil and gas over fears that a global economic slowdown would hit crude demand. Brent, the international benchmark, fell 0.59 per cent to $74.07 per barrel. Gold prices extended gains towards record highs amid the investor flight to safety. The spot price rose 0.64 per cent to $3,130.38 an ounce.
Anthony Albanese, the prime minister of Australia, which is subject to 10 per cent tariffs, said it was not “the act of a friend”.
Micheál Martin, the taoiseach of Ireland, said there was “no justification”. In London, despite the UK avoiding the worst of Trump’s tariffs, the biggest business lobby groups raised alarm.
Stephen Phipson, chief executive of Make UK, representing manufacturers — which are among the most exposed sectors, including aerospace companies — warned in a statement: “Not only will volumes of direct exports to the US decline but it will destroy decades of integrated supply chains connecting the UK with US through other trading partners.” The Federation of Small Businesses spoke of “untold damage” and called for “emergency assistance” to any small companies “at risk of collapse”.
2.30am
As Asian markets opened, equity markets in China — facing a 34 per cent tariff , on top of the 20 per cent previously imposed — weakened. The Shanghai Shenzhen CSI 300 index fell by 0.5 per cent and Hong Kong’s Hang Seng declined by 1.7 per cent. China’s yuan dropped to its lowest level in seven weeks. In Tokyo, Japan’s Nikkei index earlier fell to an eight-month low, down as much as 4.6 per cent, and Australia’s S&P/ASX 200 declined by up to 2 per cent. Han Duck-soo, the acting president of South Korea, said “the global trade war has become a reality”.
3.30am
With economists warning that many countries would probably face a recession, some heads of state threatened retaliatory measures, in a further escalation of a global trade war. In Beijing, China’s commerce ministry urged Washington to cancel its latest tariffs. The ministry said: “China firmly opposes this and will take countermeasures to safeguard its own rights and interests.” Chinese state media called it “tariff blackmail”.
In a statement about an hour later from Samarkand in Uzbekistan, Ursula von der Leyen, president of the European Commission, said the bloc was “preparing for further countermeasures to protect our interests and our businesses if negotiations fail”. In India, hit with a 26 per cent tariff, the benchmark share index fell as markets opened. The Nifty 50 was down 0.6 per cent at 23,192.40.
8am
As UK business leaders gathered in Downing Street for a meeting with the prime minister, traders in the City of London and across Europe were braced for stock markets to open in the red. The FTSE 100 index duly fell 1.5 per cent to 8,482.36 in early dealings and the FTSE 250 mid-cap index, which is more reflective of the domestic economy, also declined by 1.5 per cent to 19,361.35. The weaker dollar lifted the pound to $1.317 in late-morning dealings, the highest level since last October.
On the Continent, the pan-European Stoxx 600 dropped by 1.5 per cent, while the Dax in Germany — whose biggest trading partner is the US — declined by 1.8 per cent. Eurozone and UK government bond yields dropped and markets increased their bets on future rate cuts by the European Central Bank and the Bank of England. Expectations of a quarter-point rate cut at the Bank’s next scheduled meeting on monetary policy next month increased to about 77 per cent. Ten-year yields touched their lowest in a month at 4.533 per cent.
In No 10, sitting alongside the bosses of some of Britain’s biggest public companies, including GSK, the pharmaceuticals company, Unilever, the consumer goods group, and Johnson Matthey, the chemicals company, Sir Keir Starmer said he would continue to pursue a US trade deal: “Clearly, there will be an economic impact from the decisions the US has taken, both here and globally. But … one of the great strengths of this nation is our ability to keep a cool head.”
2.30pm
Across the Atlantic, after negative US futures markets, Wall Street fell sharply at the opening bell, sending the major indices down across the board as big tech stocks, banks and consumer goods groups suffered a heavy sell-off. The Dow Jones industrial average was down 3.6 per cent at 40,711.81 in early dealings in New York, the S&P 500 declined 4 per cent to 5,444.77 and the tech-heavy Nasdaq Composite lost 4.9 per cent to 16,736.23.
The Magnificent Seven, whose bosses had joined Trump for January’s inauguration, were not spared. They included Apple — whose iPhone is underpinned by its Asian manufacturing base — which slumped by 9 per cent, heading to its lowest close since June. Amazon slid 7.1 per cent, on course for its lowest since October.
Big multinational consumer goods groups were heavily in the red, reeling from the tariffs on Asian production hubs. Nike slumped 14 per cent; Amid the volatility, the White House press secretary urged: “To anyone on Wall Street this morning, I would say: ‘Trust in President Trump’.” On his Truth Social media platform, the president wrote: “Make America great again!!!”
4.30pm
At the close in Europe investors were left counting the cost of the worst day’s trading since early August. The Stoxx Europe 600 index of the continent’s biggest companies was down 2.6 per cent, while Germany’s Dax had lost 3 per cent. The CAC 40 in Paris suffered the biggest fall since March 2022 with a drop of 3.3 per cent. In London, the closing numbers were just as grim. The FTSE 100 has not recorded such a big fall, down 1.6 per cent, since early August.
9pm
The global tariff reaction cycle came back to roost where it all began 24 hours earlier and it made for grim reading. The broadly-based S&P 500 suffered its worst daily percentage decline since June 2020, down 4.8 per cent, while the 6 per cent drop on technology-heavy Nasdaq was the worst since March 2020. Both indices are now in correction territory having dropped more than 10 per cent from their most recent highs. The Dow Jones industrial average was down 4 per cent on the day, also its worst performance since June 2020.
