Last Friday witnessed a decline in the FTSE 100 and various European markets, following a volatile week of conflicting signals from the US President, Donald Trump, regarding tariffs. Concurrently, President Xi Jinping of China urged EU leaders to unite with China in resisting Trump’s unstable import taxes policies. Meanwhile, China declared its plan to equal US tariffs, thus spiking up its own charge to 125%.
President Xi Jinping appealed to the EU, requesting opposition against ‘unilateral bullying practices’. Following a conference with Spain’s Prime Minister, Pedro Sanchez, he argued that going against the international norms would ultimately lead to isolation. The week had been characterized by the mounting promises of increased import taxes from both China and the US.
In response to the situation, China made a declaration on Wednesday to impose an 84% import tariff on US-based goods, a significant increase from the pre-existing 34%. Similarly, President Trump introduced a 104% tariff which took effect on Wednesday and was later escalated to 125%.
Britain’s leading index, the FTSE 100, took a step back from its 3.5% rise on Thursday, after a promising start. Early trade saw a conspicuous upturn in mining companies, such as Glencore, Fresnillo and Endeavour. 20 minutes after commencement of trading in London, the Index had fallen 0.3%.
The largely domestic FTSE 250 also declined by 0.4%. This transpired in spite of data suggesting that there had been an unexpected 0.5% growth in the UK’s economy as of February. Germany’s DAX index displayed a 0.7% rise in early trade, but subsequently shifted 0.6% lower by mid-morning.
Mirroring this, France’s CAC 40 experienced a dip of 0.3%, mitigating an initial gain of 0.9%, while the pan-European STOXX 600 displayed a reduction of 0.5%. In a countermove to Trump’s ongoing tariff agenda, China voiced plans to raise its tariff on US imports up to 125% again, which is an upswing from the 84% that was previously announced on Wednesday.
The dollar index, which evaluates the world’s reserve asset relative to various international currencies, was 1.1% lower on the same morning. Fluctuating anxieties linked to trade continue to send ripples through currency markets. Concurrently, sterling has gone up by 0.7% versus the dollar in this trading session, edging towards the $1.31 benchmark.
According to recently released data, the total trade deficit in goods and services shrunk by £7.5bn, amounting to a shortfall of £1.0bn within the three months leading up to February 2025. This represents the smallest total trade deficit since the three-month period ended July 2021.
Good exports to the US surged by £500m in February 2025, marking the third month in a row of growth, whereas imports of goods from the United States saw an increase of £200m. Simultaneously, the total value of goods imports ballooned by £2.8bn, representing a 5.9% increase in February 2025. Such growth suggests a rise in imports from both EU and non-EU countries.
On the other hand, the value of goods exports displayed stability with marginal changes to both EU and non-EU exports. Meanwhile, The Office for National Statistics disclosed a 0.5% upswing in the UK’s domestic economy in February, a ray of optimism before an anticipated downturn catalyzed by Donald Trump’s tariff storm.
The end-of-week GDP figure surpassed economists’ projections for a modest rise of 0.1%. In contrast to stagnant growth in January, the figure for this period was revised up from an initial estimate of a 0.1% contraction.
The 0.5% elevation in February was largely due to a surge in the services sector, though it didn’t overshadow growth in all sectors. These figures, however, predate Trump’s 2nd April’s declaration which imposed harsh tariffs on most global nations, including a 10% tax burden on the UK.
This decision sparked a severe plunge in global equity markets and stoked a subsequent recession anxiety in both transatlantic sides.