Investors suffered the impact of Donald Trump’s threat of more tariffs yesterday as stock markets fell sharply ahead of the US president’s ‘liberation day;’ when he will announce who will be hit by the new levies.

The FTSE 100 was down 76 points (0.88%) on the day at 8,582.81, its worst month since October 2023 as UK companies, particularly in motor manufacturing, food and drink, luxury goods and engineering equipment awaited news from the White House.

Mr Trump wants to trim the $1.2 trillion global goods trade deficit by raising US tariffs, with the UK expecting to be drawn into a global trade war as Mr Trump adopts a broader set of tariffs across all countries, rather than specific targets such as China and the EU. In the UK’s favour is that the US does not have a deficit in trade.

However, with hopes of a deal before Wednesday fading, No 10 said officials would continue talks with the US “as long as there’s a chance to reach a deal”. Forecasters say a 20-percentage-point increase in tariffs on UK goods and services would cut the size of the British economy by 1% and force tax rises this autumn.

Stocks in Germany and France also fell and on Wall Street, US technology stocks were hit, including the car company Tesla, run by Mr Trump’s political ally Elon Musk and one of the businesses that tariffs are supposed to protect.

AJ Bell head of financial analysis Danni Hewson said: “The threat of a global trade war, the uncertainty of what might come next and the possibility it could all ultimately leave the US in recession have rattled confidence.

“It’s been a pretty torrid day over on Wall Street with both the Nasdaq and S&P 500 hitting six-month lows and whilst the FTSE 100 is still up more than 5% since the start of the year, March has clawed away at some of those gains with the UK’s blue-chip index down almost 2.5% over the past month.”

Fears over the potential impact on consumer confidence came into focus with news from Virgin Atlantic that it had seen a slowdown in demand over the past few weeks despite a solid start to 2025 – a sentiment already shared by US giant Delta.

“Travel stocks were just one sector under pressure today,” said Hewson. “Delta, United Airlines, Airbnb, Expedia and Royal Caribbean Cruises were all amongst the losers stateside and British Airways owner IAG and EasyJet also saw their shares in the red.

“Even working with the known unknowns, such as vehicle tariffs and taxes on steel and aluminium imports, it’s impossible to know how snarled up supply chains might get and whether the kind of supply shocks that sent inflation soaring post-Covid could happen again.”

Tartan Week

The move may have come at a difficult, or perhaps opportune, time for Tartan Week, the annual celebration of Scottish business and culture in the US.

First Minister John Swinney has been joined by a number of business representatives in New York for a week of talks with potential clients and investors.

Ahead of his visit, Mr Swinney said he would do whatever he could to ease the tariff threat to Scottish goods.

“Scotland enjoys deep and enduring links with the US, which is both our largest inward investor, and second largest export market after the European Union,” he said.

“In 2023, exports of Scottish goods to the US were worth £4 billion. And here in Scotland, more than 700 US-owned enterprises provide employment to more than 115,000 people.

“Tartan Week in April is a fantastic opportunity to celebrate Scottish culture, and promote economic opportunities on both sides of the Atlantic.

“I am looking forward to attending this week’s Tartan Week events, meeting our dynamic diaspora, and engaging with some of our biggest current and potential investors. I want to showcase Scotland’s progressive international outlook, and our focus on innovation, sustainability and growth.”