Closing summary: Trump's tit-for-tat tariffs take transatlantic toll
Donald Trump’s tariffs have roiled global markets in the last couple of weeks, and the downward momentum continued on Thursday after the US president woke up angry about EU retaliation.
The S&P 500 and the Dow Jones industrial average indices were down by 0.4% in early trading, while the tech-focused Nasdaq was down by 0.8%. Shares in the UK, France, Germany and Italy were also down.
That was despite comments from US Treasury secretary Scott Bessent, who sought to mollify investors – but also to signal that the White House will try to ignore market turmoil. On Thursday he told CNBC:
We’re focused on the real economy. Can we create an environment where there are long-term gains in the market and long term gains for the American people? I’m not concerned about a little bit of volatility over three weeks.
One person who will be watching the Trump tariff turmoil closely is Jerome Powell, the president of the Federal Reserve, the US central bank. He could be caught between trying to support the economy with looser monetary policy if tariffs hit output, and trying to tighten policy to prevent inflation from getting out of control.
Daniel Murray, deputy chief investment officer at EFG, a global private banking group headquartered in Zurich, Switzerland, said:
Imposing tariffs on steel and aluminium imports risks stoking US inflation as, particularly for aluminium, the US is highly dependent on imports.
In a context where domestic producers would enjoy increased pricing power, also because of possible shortages of these materials, the risk that increased costs are transferred to the final customer is elevated. If that is the case, higher inflation would limit the room for Fed rate cuts even in a context of possibly weaker activity.
In other news from the world of business:
The owner of John Lewis and Waitrose has tripled its annual profits but workers at the staff-owned retail group have missed out on a bonus for a third year in a row.
In our Europe coverage, Russia is ‘seeking to prolong war’, says Zelenskyy as Kremlin aide says proposed ceasefire just ‘temporary respite’ for Ukraine
Share price declines on Wall Street have eased somewhat after Treasury secretary Scott Bessent said the US economy might go through “detox” rather than “recession”.
Bessent also said that the White House under Donald Trump wants to protect strategic industries and jobs.
The FTSE 100 has lost even more momentum: it is now marginally down for the day, after earlier rising as much as 0.4%.
It does not feel like a huge stretch to say that concerns about further US tariffs may be driving the decline, after Donald Trump – who is a teetotaler – woke up angry about EU tariffs on American whiskey.
France’s Cac 40 is down 0.5%, while Germany’s Dax index is down 0.7%.
David George, the UK and Ireland chief executive of BMW, said:
We’ve made huge investments in the transition – but retail demand really isn’t in line with the ZEV mandate. We’ll see incredible challenges this year if the landscape doesn’t change.
Paul Philpott, the chief executive of Kia UK, said:
We’re feeling we’ve got swords hanging above our heads … We’re forced to incentivise and discount the very best technology we have.
(And it’s Jasper Jolly here stepping in on the blog.)
Wall Street has opened lower after Donald Trumps latest salvo on tariffs, while the UK stock market has turned positive again.
The Dow Jones industrial average fell by 70 points, or 0.17%, to 41,280 while the S&P 500 index edged nearly 5 points lower to 5,594 and the Nasdaq lost almost 50 points or 0.3%, to 17,598.
The FTSE 100 index in London is nearly 20 points or 0.2% ahead at 8,557 while the German, French and Italian markets are between 0.3% and 0.4% lower.
The dollar is now trading 0.3% higher against a basket of rival currencies such as sterling and the euro.
In other retail news, the UK sofa retailer DFS said full year profits will be almost 20% better than expected after orders rose 10% in the first half.
The company’s pre-tax profits surged to £15.8m in the six months to 29 December as cost savings more than offset cost inflation. Revenues fell by 0.1% to £504.5m as the company said it was offering interest free credit to help sales in a “challenging consumer landscape” and orders strengthened later in the period.
It said trading in the first 10 weeks of the second half had continued strongly, up 11% on the year before.
Analysts said they now expect DFS to make up to £29m of pre-tax profit, about 19% ahead of prior expectations as the group has taken share from rival SCS which has seen disruption following a takeover deal.
Model train maker Hornby is to delist from the stock market as it restructures in an attempt to reduce costs and return to profitability.
The 124-year old Margate-based firm, which also owns the model car racing brand Scalextric, said the £400,000 costs and management time involved in maintaining its listing on the junior Aim market were “disproportionately high, compared to the benefits”.
The company, which first listed in 1986, added that small trades in the shares had a big impact on its market value because the vast majority of its stock is held by three investors, private equity groups Castelnau and Aurora and Mike Ashley’s Frasers Group.
Hornby said it did not plan to change its strategy on delisting but
It is the board’s view that the cancellation will provide greater strategic flexibility and that Hornby can take and implement decisions more quickly than a company which is publicly traded as a result of the more flexible regime that is applicable to an unquoted company.
A Scalextric car racing set on display at the Hornby Hobbies stand, at the annual toy fair in London. Photograph: Yui Mok/PA
European shares reverse gains as trade war fears escalate
European stock markets have reversed earlier gains and are now in the red, following the latest twist in trade wars.
Donald Trump has threatened a 200% tariff on EU wine, champagne and other alcohol, unless the EU drops its 50% levy on American whisky – announced yesterday in retaliation for the US’s new 25% tariff on all steel and aluminium imports. The EU’s countermeasures are due to come into effect on 1 April.
The UK’s Dax has fallen 10 points to 8,532 while Germany’s Dax lost 0.86% and the French and Italian markets are down by about 0.4%.
The euro has dipped by 0.3%, but stayed near multi-month highs versus the dollar, as traders are watching the Bundestag debate about Germany’s proposed borrowing bonanza.
The dollar is currently 0.1% higher against a basket of major currencies. Sterling has edged 0.1% lower to $1.2942.
Another factor is the latest producer price data from the US, which shows a cooling in price pressures.
BREAKING: February PPI inflation falls to 3.2%, below expectations of 3.3%.
Core PPI inflation fell to 3.4%, below expectations of 3.6%.
Both CPI and PPI inflation both just FELL more than expected in February.
Just in: Donald Trump has hit back against the European Union’s planned countermeasures against his new 25% steel and aluminium tariffs, imposed yesterday on all global imports into the United States.
The EU levies would take effect from 1 April, although the EU said yesterday it was open to negotiations.
Posting on the platform Truth Social, he said that if the 50% tariff on US whisky is “not removed immediately, the US will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES. This will be great for the Wine and Champagne businesses in the US”.
Steelmakers wait and hope as UK faces ‘tricky balance’ over Trump’s 25% tariffs
A day after the US imposed a blanket 25% tariff on global steel and aluminium imports:
Sailors crossing the Atlantic in March are used to dealing with rough seas. But when two shipments of steel from Marcegaglia Stainless Sheffield were slowed up in crossing the Pond by storms this week it meant more than a few days’ extra journey: the metal was caught up in the global trade war started by the US president, Donald Trump, as well, writes my colleague Jasper Jolly.
“Obviously, it’s a massive frustration,” says Liam Bates, the president of long products at the Italian steelmaker’s northern England operation. The company had hoped to rush through two weekly shipments in order to avoid the Wednesday deadline for Trump’s 25% tariffs on steel and aluminium. Instead, it will have to bear the costs – or hope for grace from the US government.
The tariffs have put the US’s trading partners, including the UK, in a tricky situation. They are being pulled in two directions: some want trade war retaliation, while others want “pragmatic” negotiation in the hope that the changeable Trump can be persuaded to ease the levies.
The EU’s response was swift. The bloc immediately retaliated with revived levies on all-American products such as bourbon whiskey, jeans and Harley-Davidson motorcycles, and the promise of more on an array of other products including makeup, chicken, beef and metals.
Yet the UK is taking the second path: keeping its head down, and hoping it can persuade the changeable and deal-driven Trump to change his mind.
Keir Starmer told parliament on Wednesday he was “disappointed”, while adding that the UK “will take a pragmatic approach” as it tries to negotiate a deal with the US. “But we will keep all options on the table,” he said, leaving open the possibility of future retaliation.
Chris Southworth, the UK secretary general for the International Chamber of Commerce, a business group, says the UK government will come under “tremendous pressure” to retaliate, and it may still do so. However, Starmer’s relative success in mollifying Trump may open the way to talks that could roll back tariffs for the UK.
Jobs at risk unless EV demand is boosted, says SMMT
A failure to boost demand for electric vehicles (EVs) will put jobs in the UK automotive sector at risk, a major industry group has warned.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), warned of the danger of “de-industrialisation” if more support for EV purchases is not introduced.
He described the decision to remove EVs’ exemption from vehicle excise duty and the expensive car supplement as “disincentives” for people to switch to electric motoring.
Hawes also said the automotive industry “doesn’t want to see an increase in tariffs”, after Donald Trump announced a 25% tax on US imports of steel and aluminium. The SMMT chief praised the UK government for “treating things very calmly” in its response, adding: “Cool heads can hopefully prevail.”
Under the UK’s zero-emission vehicles (Zev) mandate, at least 28% of new cars sold by each manufacturer in the UK this year must be zero-emission, which generally means pure electric. Pure electric vehicles now make up a quarter of the market.
Failure to abide by the mandate or make use of flexibilities – such as buying credits from rival companies or making more sales in future years – will result in a requirement to pay the government £15,000 per polluting car sold above the limits.
Hawes said:
We need to be pulling every lever to grow this demand because the consequences of this regulatory framework and an inability to meet it, you’re beginning to see play out in terms of flattening of sales, production is down, plants unfortunately closed or certainly consolidated, jobs lost.
Nobody wants that, because this should be a driver of growth, not a driver of de-industrialisation.
Stellantis, which owns Peugeot, Fiat and Jeep, will close its van-making factory in Luton in Bedfordshire next month, affecting around 1,100 jobs.
An electric vehicle charging station at Skelton Lake Service Station in Leeds. Photograph: Danny Lawson/PA
The SMMT calculates that halving VAT on new EV purchases would boost the market by a further 15% on top of the current outlooks, delivering a total of 2m new EVs by 2028.
This would cost the Treasury around £1,000 a car initially, the group said. But combined with flexible regulation and mandated roll out of charge points, it would have benefits such as increasing business for charge points, insurance, maintenance and other sectors, and reducing road transport emissions, according to the automotive body.
A survey commissioned by the SMMT indicated just 11.6% of new car buyers intend to switch to electric in the next three years. But nearly two in five “electric sceptics” said they would change their mind if there was a purchase incentive.
Hawes said investment by manufacturers means
10 times as many drivers are going electric compared with just five years ago.
This is great progress but with the right support for consumers, we can go beyond current expectations to put a total of more than two million new EVs on the road by 2028.
Government investment to convert the electric sceptics would energise business across the country far beyond just the automotive sector.
Every stakeholder would benefit from the impact of consumer incentives which, when combined with binding targets for charge point rollout and more flexible regulation, would create a virtuous circle of rising demand that stimulates green economic growth.”
The Zev mandate percentages rise each year, and is set to reach 80% of new cars in 2030. The government is analysing feedback from a recent consultation on proposed changes to the rules, which could include making it easier for non-compliant manufacturers to avoid fines.
It has previously committed to reverse then-prime minister Rishi Sunak’s decision in September 2023 to delay prohibiting the sale of conventionally fuelled new cars and vans from 2030 until 2035.
Transport minister Lilian Greenwood told the SMMT’s Electrified conference in Westminster that the UK has a “formidable public charging network” with 75,000 chargers, but “we need to go further”. She said:
That’s why we’re running hell for leather to deliver the charging infrastructure we need to meet our Zev targets.
We knew this fundamental transition - like any big change - wasn’t going to be easy, but with each passing year, we see record numbers of drivers going electric.
Over the past five years, the average income for a farmer has been £32,272. After adjusting for inflation, this is the same level as in the mid-1970s. During the same period, the economy has grown and real-terms wages have risen in other sectors.
Farmers in the UK have been protesting recently after the government introduced inheritance tax on their assets. They argue the meagre income they make from their farms will probably not be enough to pay the charges, meaning their children will have to sell the land. This change has coincided with the 18 wettest months on record, as well as the ending of EU farming subsidies.
Parents who are worried about their children gaming on Roblox should not let them use it, the platform’s chief executive has said.
There have been reports of bullying and grooming, and fears that children are being exposed to explicit or harmful content, on the site, which is the most popular platform in the UK among gamers aged eight to 12.
Roblox’s co-founder and chief executive, David Baszucki, told BBC News the platform was vigilant in protecting its users, and said “tens of millions” of people had “amazing experiences” on the site.
But he added: “My first message would be: if you’re not comfortable, don’t let your kids be on Roblox. That sounds a little counterintuitive, but I would always trust parents to make their own decisions.
Property company Savills expects the push by employers to get their staff back to the office to boost its transaction levels over the coming year, after a string of large corporates have issued return-to-office mandates to staff in recent months.
Mark Ridley, the chief executive said:
We expect re-financing driven activity and the trend towards corporates requiring greater office attendance for staff to continue to be positive for transaction volumes.
The firm said most property markets were in recovery by the start of this year, and would be helped by expected reductions in the cost of capital, even if some economic uncertainty continues.
In the UK, leasing activity in commercial markets returned to “more normal levels” in 2024, Savills said, adding that it saw a 2% increase in take-up in the London office market last year, which is only 5% below the long-term average. This contrasted with stable take-up in the logistics market.
Increased demand from occupiers saw prime rents in the City of London climb by 7.5% over the year.
A branch of Savills estate agents in Islington, London. Photograph: May James/Reuters
Interest rate cuts during the year helped the UK’s residential property market, although it said sentiment was hit by fiscal changes which were introduced in October’ budget.
In North America, Savills said financial services companies, law firms and other professional services firms were pushing up demand for prime properties, especially those with good amenities and higher environmental standards, while there was less demand for lower grade space.
It came as the international real estate company, listed on the London stock exchange, reported a 38% increase in its underlying pre-tax profit to £130m in 2024, slightly above average analysts’ estimates.
The Savills share price fell by nearly 9% in morning trading to 904p, the lowest since February 2024, despite the firm hiking its dividend by a third.
Chris Beauchamp, chief market analyst at online trading platform IG, said:
Savills has been on the downward move for months, and it just seems like the shares are in need of a turnaround plan, and the report has not really delivered it.
