Tariffs latest news: Asian markets tumble as Trump compares tariffs to ‘medicine’

The Federal Reserve will cut interest rates five times this year, money markets indicate as Donald Trump’s tariffs send markets into a tailspin.

Traders have priced in five reductions by the US central bank as European stock markets plunged in early trading.

The sell-off on the FTSE 100 has deepened sharply in early trading.

The UK’s flagship stock market was down 6.1pc to 7,566.01, while the mid-cap FTSE 250 tanked 5.1pc.

A minister denied the Government was weakening its net-zero policy after announcing a relaxation of the rules around fines for manufacturers who do not sell enough electric vehicles.

Sir Keir Starmer has rushed through changes to electric car rules as the motoring industry faces turmoil from Donald Trump’s tariffs.

It was put to roads minister Lilian Greenwood on Times Radio that the changes watered down the original target.

She replied: “We’re not watering it down. We said in our manifesto tat we would commit to ending the sale of new pure petrol and diesel cars from 2030 and that’s exactly what we’re announcing today.

“What we are doing is clarifying for industry how we get to the total position where there will be no non-zero emission vehicles from 2035.

“What we want to do is make these clean electric vehicles affordable for absolutely everyone, and that everyone can make the switch, and that’s why we’re investing billions of pounds in supporting the car industry, in rolling out chargepoints.”

The FTSE 100 fell as Donald Trump’s tariffs raised concerns about a global recession.

The UK’s benchmark stock index was down 2.4pc to 7,864.24 while the mid-cap FTSE 250 dropped 2.6pc to 17,832.36.

One of the world’s most important technology companies tumbled in Taiwan as Donald Trump’s tariffs threatened to upend global supply chains.

Taiwan Semiconductor Manufacturing Co, known as TSMC, plunged more than 10pc on the benchmark Taiex in Taipei, which fell as much as 9.8pc

TSMC manufactures the world’s most advanced microchips for companies including Apple and Nvidia.

Mr Trump hit Taiwan with tariffs of 32pc last week but the levies do not apply to semiconductors, a major Taiwanese export. That still did not stop a market sell-off.

Taiwan’s benchmark Taiex index has fallen more than 20pc from its July peak.

A transport minister acknowledged changes to electric vehicle rules announced by the Government are not a “panacea” when asked if they would mitigate the full impact of Donald Trump’s tariffs.

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

Companies are grappling with the new rules from the White House, which mean a 25pc tariff is now applied to foreign cars imported into the US, while other products face a 10pc levy.

Roads minister Lilian Greenwood told Times Radio: “Look, these changes are not a panacea, but what we are doing is backing British business, backing our world-leading carmakers to make sure that we are as a Government helping them to meet the challenges of the future.

“We know that moving to electric vehicles is the challenge of the 21st century in transport, and we want Britain to be right at the forefront.

“This is how we’re going to create the good jobs and opportunities for the future that get the British economy going.”

The Hang Seng in Hong Kong plummeted nearly 13pc in what would be its worst day since 1997 as panic selling swept China markets.

The drop in Hong Kong’s benchmark index means it has fallen 20pc since its record highs in March, when it was the best-performing market this year, putting it in a technical bear market.

The CSI 300 in Shanghai sank as much as 8pc in its biggest drop in five years.

 Sat Duhra of Janus Henderson Investors said: “This sell-off we see is incredible for all the wrong reasons.

“There is an element of panic selling, of course; there are margin calls we need to be aware of; funds are selling down to raise cash and China retaliation has introduced more risk with a currency devaluation now on the table in the eyes of investors.”

A US hedge fund tycoon has urged Donald Trump to impose a 90-day suspension of his global tariffs to avoid “destroying confidence in our country as a trading partner”.

Bill Ackman, the billionaire financier and former Democrat donor, said the President had been successful in highlighting how other countries have taken advantage of the US with their trade policies.

He called for a “time-out” before the tariffs announced on “liberation day” come into effect on Wednesday.

He said: “If, on the other hand, on April 9th we launch economic nuclear war on every country in the world, business investment will grind to a halt, consumers will close their wallets and pocket books, and we will severely damage our reputation with the rest of the world that will take years and potentially decades to rehabilitate. 

“What CEO and what board of directors will be comfortable making large,   long-term, economic commitments in our country in the middle of an economic nuclear war?

“I don’t know of one who will do so.”

He added: “May cooler heads prevail.”

The pound edged up in early trading as investors moved out of the dollar over concerns about a recession in the world’s largest economy.

Sterling was up 0.2pc against the US currency to $1.292 as the turmoil in global markets deepened. The euro gained 0.4pc against the dollar to tip over $1.10.

Investors poured into safe havens like the yen and Swiss franc overnight and heavily sold the risk-sensitive Australian dollar.

“Things have gone from bad to worse,” said Tony Sycamore, a market analyst at IG.

“If there isn’t some sort of walking back of the announcements, then we’re heading for a liquidity event and liquidity will get sucked out of these markets big time across all asset classes.”

Rodrigo Catril of National Australia Bank added that “given the US is at the epicentre of the trade war, the USD has been suffering from outflows” with investors “looking … to diversify away from US assets”. 

The Bank of Japan said some companies in the world’s fourth-largest economy are worried about heightened uncertainty over US trade policy that could hit their profits and output.

The Bank did not make direct mention of higher Donald Trump’s tariffs in a quarterly report on regional economies.

However, it warned that “some firms voiced concern over the impact on output and profits” from US trade uncertainty.

The Bank said pay hikes were broadening for a wide range of sectors in regional areas, although some saw smaller firms voicing caution over further pay increases.

“Companies continue to pass on rising import costs at a moderate pace,” with some also considering or implementing price hikes to raise funds to pay for rising labour costs, it said.