An “indicative list” published by the Government showed products that could be targeted, including bourbon whiskey, motorcycles, guitars and jeans
Britain is braced for more market chaos on Friday as the government considers its response to Donald Trump’s tariffs. Ministers have insisted they will respond with “cool and calm heads”, but are keeping all options open, including the possibility of retaliatory tariffs on a range of American goods.
An “indicative list” published by the Government showed products that could be targeted, including bourbon whiskey, motorcycles, guitars and jeans. But an immediate response is unlikely as Trade Secretary Jonathan Reynolds told MPs he would hold a four-week consultation on retaliatory action.
The government still hopes for an “economic deal” with the US to secure some exemption from the tariffs, with Prime Minister Sir Keir Starmer promising businesses on Thursday that he would “fight for the best deal for Britain”. But even with a deal, the global impact of Wednesday’s tariffs is expected to cause a significant economic shock to the UK. The economic impact of the tariffs could already be felt, with stock markets tumbling around the world.
Meanwhile, on Thursday, London shares plunged, as investors avoided risky assets after US President Donald Trump’s reciprocal tariffs amplified global trade war and recession worries.
The blue-chip FTSE 100 touched a two-month low, closing down 1.6%, posting its largest daily drop since August 2024. The midcap FTSE 250 index fell 2.2%, hitting a one-year low.
Trump’s new tariffs set a baseline of 10% for all imports and higher duties on some of the biggest trading partners of the US, crystallizing the global markets’ fears of economic stagflation. However, London said a trade deal with the US is close, aiming to reduce the impact of new levies that could lead to a global trade war and harm its economy.
The government published a 400-page list of US goods it could include in any possible retaliatory tariff response to Trump’s tariffs on British imports. Investors added to bets on Bank of England interest rate cuts with government bond yields falling sharply after the tariffs announcement.
Banks’ shares fell 7.6%, tracking losses of European peers, as tariff concerns stoked worries about economic growth of the world’s largest economy. HSBC Holdings and Barclays were among the top losers on the blue-chip index, falling 8.9% and 8.7% respectively.
Meanwhile, sterling hit a six-month high against the dollar, making the export-heavy index less attractive and adding to the losses. Personal goods led the sectoral declines, down 10.6%, touching the lowest in six months.
Burberry and Watches of Switzerland Group slipped 10% and 13.5% respectively, mirroring losses in European luxury companies after Trump’s new tariffs impacted key luxury markets in the EU and Switzerland. Industrial metal miners stocks were down 5.3% as base metals fell and copper hit a one-month low on fears the new U.S. levies would affect industrial demand for metals. On the flip side, utilities shares, often traded as a bond proxy owing to their stable income regardless of economic situation, touched a near six-month high, gaining 4.2%.
Pharma stocks were up 1.6% as they survived a market rout on temporary tariff exemption of pharmaceutical products. Among individual stocks, Currys jumped 14.9% after the electricals retailer raised annual profit forecast. Meanwhile, Prime Minister Keir Starmer told business leaders in Downing Street that Trump’s tariffs will “clearly” have an economic impact on the UK and globally, .
Starmer said that “just as with defence and security” the world was “entering a new era” in economy and trade. He said his government still hoped to secure a deal with the US but reiterated that nothing would be “off the table” when it came to the UK’s response to the tariffs.
“I want to be crystal clear – we are prepared. Indeed, one of the great strengths of this nation is our ability to keep a cool head.” Britain has spent weeks working on a trade deal with the US to avoid the full impact of the level of tariffs introduced on countries such as Canada and China.
Asked if it was true that the UK had agreed a deal with US official but were awaiting sign-off from the president, Business Secretary Jonathan Reynolds replied: “That is not an inaccurate reflection.”
The US plan sets a baseline tariff on all imports of at least 10%, with items from countries that the White House described as the “worst offenders” facing far higher rates for what Trump said was payback for unfair trade policies. His move breaks with decades of US policy embracing free trade. Analysts said it was likely to lead to higher prices in the US and slower growth around the world.
A Downing Street source said, “We don’t want any tariffs at all, but a lower levy than others vindicates our approach. It matters because the difference between 10% and 20% is thousands of jobs.”
But Conservative shadow home secretary Chris Philp said: “Dozens and dozens of countries have the 10% tariff, which is not based on any sort of negotiating genius by the government, it’s based on the USA’s assessment of our tariffs and other obstacles.”
