Stock markets around the world fell on Thursday after Donald Trump announced sweeping tariffs – with some economists now fearing a recession.

The US president announced tariffs for almost every country – including 10% rates on imports from the UK – on Wednesday evening, sending financial markets reeling.

While the UK’s FTSE 100 closed down 1.55% and the continent’s STOXX Europe 600 index was down 2.67% as of 5.30pm, it was American traders who were hit the most.

Trump tariffs latest: US stock markets tumble

All three of the US’s major markets opened to sharp losses on Thursday morning.

By 8.30pm UK time (3.30pm EST), The Dow Jones Industrial Average was down 3.7%, the S&P 500 opened with a drop of 4.4%, and the Nasdaq composite was down 5.6%.

Compared to their values when Donald Trump was inaugurated, the three markets were down around 5.6%, 8.7% and 14.4%, respectively, according to LSEG.

Worst one-day losses since COVID

As Wall Street trading ended at 9pm in the UK, two indexes had suffered their worst one-day losses since the COVID-19 pandemic.

The S&P 500 fell 4.85%, the Nasdaq dropped 6%, and the Dow Jones fell 4%.

It marks Nasdaq’s biggest daily percentage drop since March 2020 at the start of COVID, and the largest drop for the Dow Jones since June 2020.

‘Trust in President Trump’

White House press secretary Karoline Leavitt told CNN earlier in the day that Mr Trump was “doubling down on his proven economic formula from his first term”.

“To anyone on Wall Street this morning, I would say trust in President Trump,” she told the broadcaster, adding: “This is indeed a national emergency… and it’s about time we have a president who actually does something about it.”

Later, the US president told reporters as he left the White House that “I think it’s going very well,” adding: “The markets are going to boom, the stock is going to boom, the country is going to boom.”

He later said on Air Force One that the UK is “happy” with its tariff – the lowest possible levy of 10% – and added he would be open to negotiations if other countries “offer something phenomenal”.

Economist warns of ‘spiral of doom’

The turbulence in the markets from Mr Trump’s tariffs “just left everybody in shock”, Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions in Boston, told Reuters.

He added that the economy could go into recession as a result, saying that “a lot of the pain, will probably most acutely be felt in the US and that certainly would weigh on broader global growth as well”.

Meanwhile, chief investment officer at St James’s Place Justin Onuekwusi said that international retaliation is likely, even as “it’s clear countries will think about how to retaliate in a politically astute way”.

He warned: “Significant retaliation could lead to a tariff ‘spiral of doom’ that could be the growth shock that drags us into recession.”

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Tariffs about something more than economics: power

It comes as the UK government published a long list of US products that could be subject to reciprocal tariffs – including golf clubs and golf balls.

Running to more than 400 pages, the list is part of a four-week-long consultation with British businesses and suggests whiskey, jeans, livestock, and chemical components.

Meanwhile, Prime Minister Sir Keir Starmer said on Thursday that the US president had launched a “new era” for global trade and that the UK will respond with “cool and calm heads”.

It also comes as Canadian Prime Minister Mark Carney announced a 25% tariff on all American-imported vehicles that are not compliant with the US-Mexico-Canada trade deal.

He added: “The 80-year period when the United States embraced the mantle of global economic leadership, when it forged alliances rooted in trust and mutual respect and championed the free and open exchange of goods and services, is over. This is a tragedy.”

Tanking stock markets, collapsing world orders, devastating trade wars; economists with their hair ablaze are scrambling to keep up.

But as we try to make sense of Donald Trumps’s tariff tsunami, economic theory only goes so far. In the end this surely is about something more primal.

Power.

Understanding that may be crucial to how the world responds.

Yes, economics helps explain the impact. The world’s economy has after all shifted on its axis, the way it’s been run for decades turned on its head.

Instead of driving world trade, America is creating a trade war. We will all feel the impact.

Donald Trump says he is settling scores, righting wrongs. America has been raped, looted and pillaged by the world trading system.

But don’t be distracted by the hyperbole – and if you think this is about economics alone, you may be missing the point.

Above all, tariffs give Donald Trump power. They strike fear into allies and enemies, from governments to corporations.

This is a president who runs his presidency like a medieval emperor or mafia don.

It is one reason why since his election we have seen what one statesman called a conga line of sycophants make their way to the White House, from world leaders to titans of industry.

The conga line will grow longer as they now redouble their efforts hoping to special treatment from Trump’s tariffs. Sir Keir Starmer among them.

President Trump’s using similar tactics at home, deploying presidential power to extract concessions and deter dissent in corporate America, academia and the US media. Those who offer favours are spared punishment.

His critics say he seeks a form power for the executive or presidential branch of government that the founding fathers deliberately sought to prevent.

Whether or not that is true, the same playbook of divide and rule through intimidation can now be applied internationally. Thanks to tariffs

Each country will seek exceptions but on Trump’s terms. Those who retaliate may meet escalation.

This is the unforgiving calculus for governments including our own plotting their next moves.

The temptation will be to give Trump whatever he wants to spare their economies, but there is a jeopardy that compounds the longer this goes on.

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Trump hits island home only to penguins with 10% tariffs

Malcolm Turnbull, the former Australian prime minister who coined the conga line comparison, put it this way: “Pretty much all the international leaders I have seen that have sucked up to Trump have been run over. The reality is if you suck up to bullies, whether it’s global affairs or in the playground, you just get more bullying.”

Trading partners may be able to mitigate the impact of these tariffs through negotiation, but that may only encourage this unorthodox president to demand ever more?

Ultimately the world will need a more reliable superpower than that.

In the hands of such a president, America cannot be counted on.

When it comes to security, stability and prosperity, allies will need to fend for themselves.

And they will need new friends. If Washington can’t be relied on, Beijing beckons.

America First will, more and more, mean America on its own.

No one expected penguins to bear the brunt of Liberation Day. 

But among the barrage of tariffs set out by Donald Trump, the US also took aim at uninhabited islands, talked up American beef and turned its nose up at plastic eggs.

Here is what you might have missed in the US leader’s expansive announcement.

Trump latest: Follow live updates

Tiny territories hit with big tariffs

At first glance, newly imposed tariffs on countries such as China, the European Union, India and the UK stand out – ranging from 34% to 10% respectively.

But the president also imposed tariffs on dozens of tiny territories – some of which don’t even have human inhabitants.

One of those was the Heard and McDonald Islands, an external territory of Australia in the Antarctic that is inhabited only by penguins and seals.

Despite having no human residents – or imports and exports – the island now faces a 10% tariff for any goods bound for the US.

According to export data from the World Bank, the US imported $1.4m (£1m) of mainly “machinery and electrical” products from Heard Island and McDonald Islands in 2022.

Australian territory Norfolk Island, a volcanic island 600 miles east of Queensland, was also hit with a hefty 29% tariff on exports to the US. That’s much higher than mainland Australia, which had a 10% tariff imposed.

The news was met with confusion by some of Norfolk Island’s 2,188 residents.

“Norfolk Island is a little dot in the world,” Richard Cottle, owner of a concrete-mixing business on the island, said on Thursday.

“We don’t export anything. It was just a mistake”.

Although the island does ship a modest amount of Kentia palm seeds abroad, this is typically worth less than $1m (£760,000) a year, with the products mostly going to Europe.

According to US government data, America has recorded trade deficits with Norfolk Island for the past three years.

Other tiny nations and territories were also hit with 10% tariffs, including Tokelau, a dependent territory of New Zealand, with a population of around 1,600 people, and the Cocos Islands, another territory of Australia, with a population of around 600 people.

Australian Prime Minister Anthony Albanese told reporters he had no explanation for the tariffs, calling them “unexpected” and “a bit strange”.

‘Our beef is beautiful, theirs is weak’

After announcing a 20% tariff against the European Union, Mr Trump’s secretary of commerce Howard Lutnick spoke to Fox News to try to explain what was behind the decision.

In a brief but bizarre rant, Mr Lutnick spoke about the bloc’s ban on imported chicken from the US.

“I mean European Union won’t take chicken from America,” he said.

“They will take lobsters from America… they hate our beef because our beef is beautiful and theirs is weak.”

The EU has a ban on chicken washed in chlorine – a practice that is approved by the United States Department of Agriculture.

Although US beef is not completely prohibited in Europe, any beef that has been treated with artificial growth hormones – which is legal in the US and common among producers – is banned by the EU.

Why was Russia exempt?

Russia was not on Mr Trump’s tariff list, despite his threat to introduce some on Russian oil imports last week.

The US president made the threat after telling NBC’s Kirsten Welker he was “very angry” and “pissed off” after Vladimir Putin criticised the credibility of Ukraine’s president Volodymyr Zelenskyy, as fragile peace negotiations are ongoing.

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Do Trump’s ‘Liberation Day’ tariff numbers add up?

Mr Trump said that if Russia was unable to make a deal on “stopping bloodshed in Ukraine” – and Mr Trump felt that Moscow was to blame – then he would put secondary tariffs on “all oil coming out of Russia”.

“That would be that if you buy oil from Russia, you can’t do business in the United States. There will be a 25% tariff on all oil, a 25 to 50-point tariff on all oil,” he said.

Axios reported that White House press secretary Karoline Leavitt told the publication on Wednesday that Russia was left off the tariffs list because US sanctions already “preclude any meaningful trade”.

Russia ran a $2.5bn goods trade surplus with the US in 2024, according to the US Trade Representative’s office, falling from $35bn in 2021 as a result of sanctions put in place due to the war in Ukraine.

World’s poorest nations face highest tariffs

Many of Mr Trump’s tariffs have targeted the world’s poorest countries.

Lesotho in southern Africa, listed as the 22 poorest country in the world, has been slapped with the highest duty of 50%. It primarily exports diamonds and garments, with the US as one of the top five exporting destinations, Sky News’ US partner network NBC News reported.

The second-highest tariff went to Cambodia at 49%, even though the US is Cambodia’s largest single-country export destination.

Madagascar in east Africa, the world’s ninth poorest country, will face 47% reciprocal tariffs. It primarily exports vanilla, cloves, and garments, with the US among the top five countries it exports to, according to NBC.

‘Huge complexities’ for Northern Ireland and the Republic

Under the 10% tariff imposed on the UK, Northern Irish goods will also be covered at the same rate.

Whereas the Republic of Ireland will subject to a 20% tariffs – which Mr Trump imposed on the entirety of the EU.

Reacting to the announcement, Ireland deputy premier Simon Harris said the tariff difference would create “huge complexities” for products that need to be carried across the cross-border dimension during production.

He said the issues were similar to those at play during the Brexit debate around maintaining a frictionless land border on the island of Ireland.

Mr Harris said it was on the US to “outline their understanding” on how the 10% differential between Northern Ireland and Ireland will play out.

Trump defines groceries

As has become common when delivering major addresses, the US president repeatedly deviated from his script.

At one point, he took time to define the word groceries: “It’s a bag with a lot of different things in it.”

He went on to describe the word as “old-fashioned” but “beautiful”.

‘Could you use plastic eggs?’

In another part of his wide-ranging speech, Mr Trump got onto the topic of eggs – the price of which reached an all-time high earlier this year in the US due to the outbreak of bird flu.

On Wednesday, Mr Trump confirmed that the annual White House tradition of rolling around 30,000 Easter eggs across the South Lawn is expected to proceed, and will use real eggs, despite pleas for plastic ones to be used instead.

“They were saying that for Easter ‘Please don’t use eggs. Could you use plastic eggs?’ I say, we don’t want to do that,” Mr Trump said.

He did not clarify who was telling him not to use real eggs.