The FTSE 100 slipped on Wednesday as markets braced for Donald Trump’s much-feared announcement of his plans for tariffs on some of America’s biggest trading partners.
It’s a big day for global markets. Donald Trump’s pledge to his core voter base to start a fight with the rest of the world by implementing a range of economically damaging trade tariffs is set to come into force.
Trump’s announcement, scheduled for 4 p.m. Eastern time from the White House Rose Garden, will reveal the full extent of his plans to level the playing field with reciprocal tariffs.
Trump has long signaled the tariffs, so any negativity in markets will likely be a result of disbelief that he followed through with them, rather than any major surprise.
Stocks were understandably nervy, and the FTSE 100 was 0.8% weaker at the time of writing.
“Investors are on tenterhooks as the clock ticks down what’s expected to be the biggest wave of tariffs on US trading partners. It’s been dubbed Liberation day by President Trump, but it’s more like entrapment day, with more countries set to be tangled up in a web of fresh duties,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The internationally focused FTSE 100 is on the back foot in early trade as concerns swirl about the effect on growth prospects for economies around the world.”
What happens next is the question. Do global governments fight back with tariffs of their own? Or do they try to negotiate? The answer to this question will be the key driver of markets in the coming weeks.
A think tank has suggested the UK could lose up to 25,000 jobs in the car manufacturing industry due to Trump’s tariffs. Industry in Mexico, Canada and other countries could also suffer similar fates. Will impacted countries respond with additional tariffs on US goods or just suck it up?
Equity investors are not hanging around to find out, and the recent sell-off resumed on Wednesday with large swathes of the FTSE 100 trading in negative territory.
Those FTSE 100 companies that are likely to be impacted by tariffs the most were the most heavily hit.
“Keir Starmer has focused a lot of his energy on keeping the conversation going with Trump. If that approach doesn’t prove fruitful, we could see heightened volatility among shares in companies linked to the pharma, food and drink, aviation, chemical and automotive sectors – the biggest sources of British exports to the US,” said AJ Bell’s Russ Mould.
“It was telling that GSK, AstraZeneca, Rolls-Royce and Melrose were among the top fallers on the FTSE 100, given they are in the firing line if Trump doesn’t give the UK special treatment.”
Rolls Royce was the biggest faller on the day, shedding 3.5% of its value.
Housebuilders were weaker as the threat of inflation and higher interest rates for tariffs weighed. Persimmon and Taylor Wimpey fell 3.4% and 2.9% respectively.
There was a minor bid in Marks & Spencer and Next as investors bought up quality.