European markets continued to slide on Friday after China imposed retaliatory tariffs on U.S. goods, adding to the uncertainty caused by the U.S.’s recent tariff announcement. The UK’s FTSE 100 dropped 3.7%, while Germany’s DAX plummeted by over 5%. Some companies saw their stock prices tumble by double digits, compounding the losses from the previous day.
The declines come as traders worry that the tariffs, which were introduced by U.S. President Donald Trump, will drive up prices and stifle economic growth both in the U.S. and globally. On Thursday, U.S. markets suffered their worst day since the onset of the Covid-19 pandemic in 2020, following the announcement of sweeping tariffs. Despite the market downturn, President Trump remained optimistic, claiming that “things are going very well” and suggesting the markets would soon “boom.”
However, the optimism proved short-lived, as markets continued their downward trajectory on Friday. The situation worsened when China imposed a 34% tariff on all U.S. goods starting April 10, triggering further panic in the global markets. In London, shares of major companies took a significant hit, with Barclays and NatWest falling by 10%, mining giant Glencore also dropping 10%, and Rolls-Royce, the aero-engine manufacturer, losing 8%.
Russ Mould, an investment director at AJ Bell, noted that the market turmoil was unrelenting, despite hopes that the pain would subside. “There are so many moving parts that getting your head around the situation [as an investor] isn’t easy,” he said. The uncertainty around the tariffs and their widespread impact on various sectors has left investors struggling to comprehend the full scale of the situation.
Jane Sydenham, investment director at Rathbones, pointed out that banking stocks, companies with exposed supply chains, and tech stocks had been particularly hard-hit by the ongoing volatility. In response, investors have flocked to safe-haven assets like gold and government bonds to shield themselves from the market swings.
China’s response to the U.S. tariffs was seen as inevitable, given the economic pressures it faced from the U.S.’s 54% tariff on most Chinese goods. According to Sydenham, China’s large economy enables it to withstand such actions, but smaller economies are facing greater challenges.
The U.S. dollar index, which measures the value of the U.S. currency against a basket of other currencies, fell sharply by 1.9% on Thursday, its steepest drop since November 2022. On Friday, the index steadied, rising slightly by 0.02%.
Oil prices also dropped sharply, as concerns mounted that the tariffs could further slow global economic growth and escalate trade tensions. Brent crude prices fell by 6%, reaching $62 per barrel.
The International Monetary Fund’s Managing Director, Kristalina Georgieva, warned that the new tariffs represent a “significant risk to the global outlook” at a time when economic growth is already sluggish. She added that the IMF was assessing the “macroeconomic implications” of the tariffs and emphasized the need to avoid actions that could worsen the global economy.
In the U.S., stock markets had already seen steep declines on Thursday. The S&P 500 dropped 4.8%, and the tech-heavy Nasdaq sank nearly 6%. Major consumer brands like Nike, Apple, and Target were among the hardest hit, with their shares falling by more than 9%. The ongoing market downturn highlights the growing concerns over the potential long-term effects of the U.S.-China trade war.
