Stock sell-off resumes as Trump’s China tariffs spook investors

Today’s agenda: Switzerland seeks closer EU ties; exclusive interview with Ursula von der Leyen; coffee prices at breaking point; and Naomi Campbell’s charity scandal

Good morning. Global stocks resumed their sell-off as banks and investors warned that Donald Trump’s tariffs could tip the US into recession.

Market turbulence: Asian markets tumbled this morning while gold hit a record high. An index of the dollar against a half-dozen trading partners’ currencies slid past a key threshold for the first time since July 2023 as a rush from US assets sent the yen, euro and sterling surging. Overnight, the S&P 500 dropped 3.5 per cent, a sharp turnaround from the previous session’s 9.5 per cent surge, while the tech-heavy Nasdaq Composite dropped 4.3 per cent after its best day since 2001.

What Wall Street is saying: Banks and investors said Trump’s decision to hoist duties on Chinese imports as high as 145 per cent and keep in place a 10 per cent universal tariff presented a serious risk for the American economy. “Combined with the ongoing policy chaos on trade and domestic fiscal matters, along with the still-large losses in equity markets and hit to confidence, it remains difficult to see the US avoiding recession,” JPMorgan said in a note to clients.

Read the FT’s live coverage of the global fallout, follow the latest on tariffs and executive orders in our Trump tracker and scroll down to read our story on one unexpected winner from the tariff chaos.

• Consumer impact: US retailers are warning of higher prices, as analysts estimate Trump’s levies could cost the average household $4,700 a year.

• Dollar’s status: The US would be better off without the dollar’s role as the dominant “safe” currency, writes Michael Pettis of the Carnegie Endowment.

• Opinion: Trump’s tariffs are testing American attitudes towards pain and shared adversity, writes Gillian Tett.

For more on markets, sign up for the Unhedged newsletter here if you’re a premium subscriber or upgrade your subscription here. Here’s what else we’re keeping tabs on today and over the weekend:

• Economic data: Germany reports March inflation figures, while the UK has its February GDP estimate.

• Nato: The UK and Germany chair the Ukraine Defence Contact Group meeting in Brussels.

• Gabon: The African country holds its presidential election tomorrow.

• Companies: Wall Street banks begin reporting results today, led by JPMorgan Chase, Morgan Stanley, BNY and Wells Fargo.

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. Exclusive: The EU is prepared to deploy its most powerful trade measures and may impose levies on US digital companies if negotiations with Trump fail to end his tariff war against Europe. European Commission president Ursula von der Leyen told the Financial Times that the EU would seek a “completely balanced” agreement with Washington during Trump’s 90-day pause on additional tariffs. Read the full interview.

2. Exclusive: OpenAI has slashed the time and resources it spends on testing the safety of its powerful artificial intelligence models, raising concerns that its technology is being rushed out without sufficient safeguards. One person testing the upcoming o3 model said: “I hope it is not a catastrophic mis-step, but it is reckless. This is a recipe for disaster.” Here’s what’s driving the time crunch.

3. Swiss President Karin Keller-Sutter will join an EU finance ministers’ meeting in Warsaw today, the first time the Alpine nation has done so, as Trump’s tariff war reignites a long-standing debate in Switzerland: whether it should inch closer to the EU, its largest trading partner.

4. Bridget Brink, the US ambassador to Ukraine, is stepping down following policy disagreements with the Trump administration. People familiar with Brink’s decision said she had come under increasing pressure from senior administration figures who questioned her willingness to support their Ukraine strategy.

5. Creditors are increasingly struggling to recover unpaid debts in England and Wales as funding pressures have led to “extremely slow and ineffective” enforcement of court orders, according to the Civil Justice Council. The body said the “inability to enforce effectively through the County Court has destroyed confidence amongst creditors”.

The Big Read

As European cities struggle to deal with a post-pandemic resurgence of mass tourism, short-term letting platforms such as Airbnb, Vrbo and Booking.com are once again in the line of fire. Residents of tourist hotspots have long demanded the platforms be banned, but with booking numbers rising, holiday rentals are winning the war for Europe’s city centres.

We’re also reading . . . 

• £4 espresso: Consumer tolerance for soaring coffee prices is at a breaking point, the chief executive of Italian coffee roaster Lavazza told the FT.

• Tariff winner: The turmoil from Trump’s trade policies has ensnared the entire automotive industry except for French group Renault. Here’s why.

• Germany’s ‘Black Zero’ statue: The quiet retirement of the Schwarze Null, a symbol of the country’s fixation on balanced budgets, encapsulates the seismic shift under way in Europe’s largest economy.

• North Sea wind farms: As seabeds fill up with ever bigger turbines, operators are asking: is there enough wind to go around?

Chart of the day

Arctic sea ice hit a record low for the end of the region’s winter last month, as melting opens up the North Pole to increased military and energy exploration by Russia and other countries.

Take a break from the news

Naomi Campbell’s charity Fashion for Relief ended in disgrace, with the supermodel banned from running any charity for five years. Now, Campbell is laying out what she says really happened — and tells a tale of stolen identity, siphoned funds and betrayed friendship.