US President Donald Trump’s punitive tariffs have sent shockwaves through global markets, with stock indices plummeting by nearly $5tn last week. The UK and US experienced losses not seen since the early days of the Covid-19 pandemic. Analysts warn that volatility will persist as investors weigh the impact of the trade war on the global economy.
The Trump administration’s “liberation day” tariffs, set to kick in from Wednesday, have sparked fears of a global recession. EU leaders are considering their response, while the UK Prime Minister has vowed to shield British businesses from the tariffs. However, economic forecasters say the 10% rate imposed on the UK is at the lowest end of the range and could still tip the country into decline.
Analysts predict that US growth and the global economy are at risk of recession. A global trade slowdown is anticipated, with potentially devastating consequences for employment and economic growth. Trump’s ally, Elon Musk, has called for a “free-trade zone” between the EU and US, but duties on European imports to the US are set to take effect on Wednesday.
The EU has condemned the tariffs, while China has responded with retaliatory measures. George Magnus, an expert on China’s economy, suggests that a deal is still possible in the longer term. However, Trump needs to demonstrate the effectiveness of his trade policies without causing damage to the American economy.
As markets await the outcome of the US-China trade dispute, investors are bracing themselves for another turbulent week ahead.
Source: https://www.theguardian.com/us-news/2025/apr/06/markets-brace-for-volatile-week-as-leaders-weigh-up-retaliation-to-trumps-tariffs