FTSE 100 opens and drops to one-year low as European and Asian markets continue to plunge in Trump tariff aftershock

Poland’s Prime Minister Donald Tusk has said the stock market reaction to the US President’s tariffs was “predictable”.

“The stock market earthquake from Japan through Europe to America must be survived without nervous decisions,” he wrote on social media, adding that the Polish stock market was also hit.

He added: “but political and economic stability are our assets in this difficult time. We will calmly persevere!”

World stocks plunged on Monday as US President Donald Trump showed no sign of backing away from his sweeping tariff plans, and investors bet the mounting risk of recession could see the Federal Reserve cutting interest rates as early as May.

Monday’s rout extends a two-day selloff that wiped trillions of dollars from equity values after US President Donald Trump’s administration announced sweeping tariffs last week.

Japan’s blue-chip Nikkei slid almost 8 per cent, European shares were down 6 per cent, US stock futures pointed to a sharp selloff on Wall Street later on and the VIX stocks volatility gauge jumped to its highest since August.

US President Donald Trump warned foreign governments they would have to pay “a lot of money” to lift sweeping tariffs, characterising the duties as “medicine” and delivering more pain for global financial markets on Monday.

Speaking to reporters aboard Air Force One on Sunday, Trump indicated he was not concerned about losses that have wiped out trillions of dollars in value from world stock markets.

“I don’t want anything to go down. But sometimes you have to take medicine to fix something,” he said as he returned from a weekend of golf in Florida.

France’s Cac 40 was down around 5.3 per cent in the morning’s trading.

The panicked mood triggered by Donald Trump’s sweeping tariffs was felt across Europe on Monday morning.

The UK’s FTSE 100 has plunged to a one-year low as fears deepen over the global impact of Donald Trump’s tariffs, despite Sir Keir Starmer promising new measures to support under-pressure manufacturers.

Analysts have warned that the scale of disruption in global financial markets is one of the worst to be felt in decades.

The index, which tracks the country’s top 100 listed firms, dropped by about 5 per cent in early trading on Monday as a sharp sell-off kicked in shortly after markets opened.

The panicked mood was felt across Europe, with Germany’s Dax index recording a drop of about 6.5 per cent, and France’s Cac 40 down around 5.3 per cent in the morning.

Overnight, Asian stocks across the board were sinking to new lows after Mr Trump said he will not back down on his sweeping import taxes unless countries even out their trade with the US.

The prime minister has promised to make a raft of reforms designed to provide “certainty” and “support for industry” as firms grapple with the impact of new rules from the White House.

Under new measures to be announced on Monday, rules around fines for manufacturers who do not sell enough electric cars will be relaxed, and supercar firms will be exempt.

While Sir Keir will reinstate the 2030 ban on the sale of new petrol and diesel cars, luxury carmakers like Aston Martin and McLaren will still be allowed to keep producing petrol cars beyond that deadline.

Since Mr Trump announced his financial plans on Wednesday, a 25 per cent tariff is now applied to foreign cars imported into the US, while other products face a 10 per cent levy.

The UK transport secretary did not say whether it is time to rescind the offer of a state visit to Donald Trump and said Sir Keir Starmer will be “honest” in conversations with allies about the “knock-on impact” of tariffs.

Asked whether the government should tell the US president to forget the visit, Heidi Alexander told BBC Radio 4’s Today programme: “So, standing up for British industry is about finding solutions, and, as I have said, a constantly escalating trade war is in nobody’s best interest, and I know that the Prime Minister has been speaking to (Premier) Mark Carney in Canada, President (Emmanuel) Macron from France, over the last couple of days to ensure that we have those conversations with our international partners to make sure that we navigate this situation as well as we can.

“And it’s part of the reason why today I am announcing those changes to the zero-emission vehicles mandate, which provides certainty to the car industry, British manufacturers.”

Asked whether Sir Keir will urge Mr Trump to change course, Ms Alexander said the prime minister “has discussions internationally with allies, (and) he will be honest about what is both in the best interests of the British people, and actually the sort of global impacts of the global tariffs will have a knock-on impact upon our economy”.

Sir Keir Starmer has “built a relationship” with Donald Trump and will be “honest” with the UK’s allies about the impacts of tariffs on the national and global economy, the transport secretary has said.

Speaking on BBC Radio 4’s Today programme, Heidi Alexander said: “So you’re right to say that the prime minister has built a relationship with President Trump.

“I think that has been obvious over the last couple of months.

“We’re clear that, actually, a constantly escalating trade war where tariffs are ratcheted up is bad for global demand.

“It’s bad for prices, which means it’s bad for British consumers and so, obviously, when the prime minister has discussions internationally with allies, he will be honest about both what is in the best interests of the British people, and actually the sort of global impacts of the global tariffs will have a knock-on impact upon our economy.”

Sir Keir has been speaking with Canadian Prime Minister Mark Carney and French President Emmanuel Macron over the last few days regarding how best to “navigate” the current economic climate, she added.

The UK transport secretary said global tariffs are “bad news” when asked if the world was heading towards a global recession.

Heidi Alexander told Sky News: “So the imposition of global tariffs and the reciprocal tariffs that some countries have and retaliatory tariffs that some countries have decided to apply, are bad news for the global economy, because it’s bad for global demand, it’s bad for prices and it’s bad for consumers, and so that is why we have to do everything that we can to protect the interests of the British people and British businesses, and that is why we are setting out a package of support today for the car industry to provide certainty to British manufacturers and to ensure that they can remain at the cutting edge of the transition to electric vehicles, and also make sure that consumers can benefit from the cheaper running costs of electric vehicles as well.

“And so that’s why the prime minister has been clear that we need to do absolutely everything we can as a government to shelter British businesses from these global economic headwinds.”

European Commissioner for Industrial Strategy Stephane Sejourne said the European Union’s response to US tariffs should be “proportionate” and hoped bourbon will be dropped from a list of US imports that could be slapped with additional tariffs.

The European Commission, which coordinates EU trade policy, will propose to members late on Monday a list of US products to hit with extra duties in response to US President Donald Trump’s steel and aluminium tariffs rather than the broader reciprocal levies.

The 27-nation EU bloc faces 25 per cent import tariffs on steel and aluminium and cars and “reciprocal” tariffs of 20 per cent from Wednesday for almost all other goods.

One product that has received more attention and exposed discord in the bloc is bourbon. The Commission has earmarked a 50 per cent tariff, prompting Trump to threaten a 200 per cent counter-tariff on EU alcoholic drinks if the bloc goes ahead.

Wine exporters France and Italy have both expressed concern.

“For bourbon, I have hopes that this element is taken out of the list. We will see in the coming hours,” Sejourne told France Inter radio on Monday.

Sejourne also said the EU had several cards up its sleeve to put pressure on America apart from tariffs, including “withdrawing US companies from our European public markets”.