UK markets have fallen sharply again this morning, following the trend of Asian stocks overnight. Earlier, Donald Trump insisted the trade war is „medicine“ for the US economy – but has ally Elon Musk broken ranks to disagree with him? Listen to Trump 100 as you scroll.
Monday 7 April 2025 12:27, UK
Stock markets are falling dramatically and countries around the world have issued dire warnings about the global economy since Donald Trump unveiled his tariffs on trade.
But it’s easy to be overwhelmed by it all and to wonder – does this have any impact on our own personal finances?
Tomorrow at 4.30pm on Business Live, we’ll be putting your questions to a panel of experts.
From pensions and rising prices, to mortgages and savings, we want to hear from you about your concerns.
Use the form at the top of this live page to submit your questions.
We’ll explain the connections between Trump’s trade war and market turmoil, and the money in our pockets.
By Sarah Taaffe-Maguire, business and economics reporter
Another day of the new trade world order, another sea of red on European stock markets – as traders reorient their understanding of how the global economy will work.
Benchmark stock indexes of major EU economies are down massive amounts, as investors sell off shares in European companies, signifying they’re no longer seen as safe investment bets.
If you’re looking for a saving grace in all this, it’s that some of the drops have moderated.
Rather than Germany’s DAX stock index tumbling 10%, the fall has stabilised to just over 4%.
The same goes for France’s CAC 40 and the Europe-wide measure of company share price performance, the Stoxx 600.
After an initial near 7% plunge, France’s benchmark pared back losses and is down just short of 4%.
The Stoxx 600 has lost more than 3.5%, an uptick from the open.
Donald Trump has again posted on social media with his latest tariff message.
This time, he’s singled out China, which he described as „the biggest abuser of them all“.
He also said – incorrectly – that there is „no inflation“ in the US.
While US inflation did cool in February, the chair of the US Federal Reserve – the country’s central bank, like the Bank of England – Jerome Powell said on Friday the impacts from tariffs will likely be „significantly larger than expected“.
Import taxes will probably lead to „at least a temporary rise in inflation“, Powell said, but he added „it is also possible that the effects could be more persistent“.
Here’s what Trump wrote in full and unedited:
Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place. This is despite the fact that the biggest abuser of them all, China, whose markets are crashing, just raised its Tariffs by 34%, on top of its long term ridiculously high Tariffs (Plus!), not acknowledging my warning for abusing countries not to retaliate. They’ve made enough, for decades, taking advantage of the Good OL‘ USA! Our past „leaders“ are to blame for allowing this, and so much else, to happen to our Country. MAKE AMERICA GREAT AGAIN!
Helen-Ann Smith, Sky News‘ Asia correspondent, explains that markets on the continent are not just responding to Donald Trump’s tariffs.
Crucially, she says, they are also reacting to how China responded.
Watch more below.
We’ve received lines from various ministers across the EU this morning, all calling for a need for dialogue with the US.
Ahead of a meeting of EU trade ministers in Luxembourg, here’s what a few have said today – and, remember, Donald Trump imposed a 20% tariff on the bloc, starting this Wednesday.
France
Trade minister Laurent Saint-Martin said they are „against any trade war“ and „prefer cooperation to confrontation“.
„Our end goal remains the same, to negotiate back to where things were,“ he said.
„And if that’s not possible, of course the EU must react, firmly and proportionally.“
Italy
Antonio Tajani, the foreign minister, suggested the EU could postpone its initial counter-tariffs – responding to earlier US steel and aluminium tariffs – to 30 April from 15 April.
„We can perhaps think about a postponement to the 30th, but we certainly do not oppose (the tariffs),“ he said.
„Let’s see if we can postpone it by a few weeks so that there is more time for dialogue.“
The Netherlands
Trade minister Reinette Klever said the EU will need to remain calm and proportionate in its response.
„We need to get ourselves at the table with the Americans and see how we can lower these tariffs,“ he said.
„We need to remain calm and respond in a way that de-escalates. The stock markets right now show what will happen if we escalate straightaway.
„But we will be prepared to take counter-measures if needed to get the Americans at the table.“
Germany
Economy Minister Robert Habeck talked up the EU’s strong position.
„The stock markets are already collapsing and the damage could become even greater,“ he said.
„It is therefore important… to act clearly and decisively and prudently, which means realising that we are in a strong position. America is in a position of weakness.“
He added: „If every country is counted individually, and we have a problem here with red wine and there with whisky and pistachios, then it will all come to nothing.“
In another sign of the kind of stress markets are under right now, a UK online investment platform is having tech issues.
Users are facing delays in accessing Vanguard, with hundreds experiencing problems, according to outages tracker Down Detector.
„We are aware that Vanguard clients may be experiencing delays in viewing certain account information,“ a Vanguard spokesperson said.
„Our tech teams are taking steps to identify the root cause and mitigate any impact. We apologise for any inconvenience as we work to resolve this issue.“
It isn’t clear whether the problems were linked to the recent market turmoil or increased trading activity.
More movements now from elsewhere in the world, this time in South Africa – where the currency has fallen to its weakest point in more than a year.
At about 9.15am UK time, the rand was down 1.5% against the dollar, touching its lowest level since October 2023.
The rand is highly sensitive to risk and tends to be dropped at times of global market uncertainty, as is the case following Donald Trump’s tariff package.
Another factor behind the rand’s recent fall – it lost more than 3% against the dollar last week – is domestic politics, with the two biggest political parties in government clashing over the national budget.
As we reported earlier, investors are turning to what they consider to be safe-haven currencies – see 10.45am.
By Ed Conway, economics and data editor
Of course, this is dramatic. Of course, markets are slumping.
Because if you take Donald Trump at his word (something investors are now finally beginning to do), he is attempting single-handedly to reverse and uproot decades worth of economic history in the space of a few months.
Because if this really is „the end of globalisation“, as a few politicians, including Keir Starmer, are now calling it, it constitutes one of the most wrenching, painful episodes in modern times.
Your phone is the perfect example
To see what I mean, the best place to begin is by pondering the hidden life of the device you’re reading this on. I’m assuming it’s a smartphone, specifically the latest iPhone, but most of the following applies for other smartphones, and indeed many laptops or desktop computers.
The display was made in South Korea or Japan. The camera module was made by Sony in Japan (who have a particular expertise in this type of specialised silicon that few other companies have been able to match). The batteries (for the latest iPhone at least) are made in India, though these days the vast majority of the world’s cells are made in China.
On it goes – the memory chips are from South Korea, which has a near monopoly on solid state storage silicon. The logic chips – the ones that help the device „think“, are made in Taiwan, albeit with IP from all over the world, including America and even Britain.
Some of the chips do indeed come from the US – in particular the modem, though the company behind them (Qualcomm) sometimes manufactures in Taiwan. But there are some from Europe too – most notably the spatial sensor chips that come from Bosch in Germany.
The US digger reliant on British steel
If you are looking for an example of „globalisation“, you couldn’t do much better than the smartphone.
But even this potted geography lesson understates it because those fabrication plants in Taiwan and South Korea, turning out those silicon chips that help the phone think and remember stuff, are totally dependent on machines made by a company called ASML, based in the Netherlands.
Those Dutch machines, in turn, contain components from hundreds of other companies around the world, including in Germany and the US. On it goes.
Nor is this degree of interconnectedness solely to be found in high-tech equipment.
The other day, I was up in Scunthorpe at the blast furnaces of British Steel. It turns out the iron they smelt there doesn’t just go into the rails that striate this country. They also make the steel that goes into the tracks of Caterpillar trucks.
That’s right: the iconic tracked diggers – for many people the most American of all things – are all mounted on steel „track shoes“ made in the North East of England.
‚Made in China‘ an enormous over-simplification
The further you look around the world of manufactured products, the more you realise that nearly everything you touch on a daily basis has, in the months before it arrived in your life, been on a long trip from factory to factory, taking it all around the world. That device you’re reading this on may say „made in China“ on the back, but that’s an enormous over-simplification. It was made more or less everywhere.
This is the way the world works today – like it or not. In a sense it’s the ultimate extension of what Adam Smith discussed back in the earliest days of economics, when he described a „pin factory“ where the work of making a simple pin was divided up between different people, with each worker specialising in a particular task rather than trying to make the whole pin themselves.
Today we have a sort of international division of labour. Today, nearly everyone goes to China to get their batteries. They go to South Korea to get their memory chips. The upshot is these factories have become ever more efficient at making their products. And – here’s where it matters for the rest of us – the price of making and buying this stuff goes down.
Watch below from 2 April: Conway with the key things you need to know after Trump’s tariffs reveal.
Today the reason one can buy what would once have been classified as a supercomputer for a few hundred pounds is because of this division of labour. Globalisation made everything, from computers to Caterpillar trucks to T-shirts, that bit cheaper than they would have been had we attempted to manufacture them all in a single country.
But the ugly side of this economic shift is that those regions that used to do the manufacturing – be it the „rust belt“ of America or the Midlands and North East of England – have seen much of their traditional work disappear. And while economists have insisted that cheaper products make everyone better off in net terms, the reality is that these parts of our countries haven’t got better off. They have been hollowed out.
And in time, resentment about globalisation has built up – for good reason.
This is the world we inhabit today. Unpicking it will be phenomenally difficult and phenomenally expensive.
Watch more of Ed Conway’s reporting below – last week, he was in North East England with exclusive access, looking at the end of British steel as we know it.
Trump’s Rose Garden speech will reverberate for long time
Trying to relocate all those functions – factories and labour markets with expertise that has built up over decades – would be incredibly difficult and would take a long time.
But that seems, as far as anyone can tell, to be the aspiration of Donald Trump. That appears to be the objective of his tariff policy.
Up until now, most investors had assumed that the president wasn’t entirely serious about this – that he merely intended to scare a few Asian companies into opening factories in key swing states. And who knows – that may well turn out to be the case. But he certainly seems more serious this time around – and less phased by the negative market reaction.
In the meantime, we are left with those tariffs.
Think back to that iPhone. Think back to those Caterpillar tracks. All those components now face tariffs when they arrive in the US. That will push up the cost of buying pretty much anything in the US, and will accordingly push down the demand for those goods.
And since America is the world’s consumer of last resort – the biggest importer of goods anywhere – that has an enormous bearing on demand around the world.
So, yes, of course, this is dramatic. Of course, markets are slumping. No one knows what the US president will do next.
Either way, what happened last week in the Rose Garden will reverberate for a long time to come.
Watch below: The moment Trump unveiled his consequential tariffs chart.
Donald Trump’s billionaire backer and ally heading up a team for „government efficiency“ may have broken ranks on social media.
Elon Musk has shared a video – posted by another user – extolling the benefits of free markets and complex supply chains.
Using the example of a pencil, US economist Milton Friedman explained how different stages in different parts of the world contributed to its creation.
„Literally thousands of people cooperated to make this pencil,“ Friedman, who died almost 20 years ago, said.
It’s the „magic of the price system“, he added, and „that is why the operation of the free market is so essential“.
„Not only to promote productive efficiency, but even more, to foster harmony and peace, among the peoples of the world,“ he said.
More investors are turning to the Japanese yen and Swiss franc, as the dollar’s status as a safe haven erodes in the eyes of markets.
Today, the risk-sensitive Australian and New Zealand dollars, as well as the Swedish and Norwegian crowns, all fell against the dollar.
But, in turn, the dollar fell 0.75% against the yen, following a 1.4% fall earlier during trading hours.
Against the Swiss franc, the dollar fell 1.15%.
Both currencies have emerged as significant winners in the aftermath of Donald Trump’s tariff package.
While the dollar is typically known to be a safe haven asset, its status appears to be falling as uncertainty grows over tariffs.
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Trump tariffs latest: Musk shares video about 'essential' free market – as stocks continue to suffer – Sky News
