FTSE 100 Falls as Markets Brace for Trump’s Tariff Shock on ‘Liberation Day’

Markets across Europe and Asia pulled back on Wednesday as investors braced for a major announcement from US President Donald Trump. He’s expected to reveal a sweeping new round of tariffs later today at 9pm UK time—a moment he has dubbed “Liberation Day”.

The FTSE 100 fell 0.4% in early trade to 8,595 points. Germany’s DAX dropped 1%, while France’s CAC 40 slid 0.5%. The broader STOXX 600 index was also down 0.6%, reflecting caution across the continent.

Market participants are growing increasingly nervous about the potential fallout of Trump’s proposed levies, which could ignite a fresh wave of global trade tensions.

“Nervousness is the dominant sentiment right now. Investors are hoping for some clarity,” said Ben Bennett from Legal & General Investment Management. “But tariffs are already weighing on business sentiment, and this will probably lead to lower economic activity in the coming months.”

Gold Gains as Traders Seek Safety

As uncertainty increases, investors have turned to gold. The precious metal rose 0.2% to trade at $3,150.90 an ounce, extending its recent rally after setting a fresh all-time high of $3,148.80 the previous day.

Gold continues to benefit from safe-haven flows as traders hedge against possible shocks from Trump’s tariff plan. If the announcement proves more aggressive than expected, gold may gain even more ground.

Pound Edges Down as Dollar Strengthens

The British pound slipped 0.1% to $1.2910 against the US dollar. The modest decline reflects market uncertainty, with investors seeking shelter in the greenback ahead of the evening’s tariff announcement.

Automotive Industry on High Alert

New research warns that Trump’s proposed tariffs on cars and car parts could devastate the UK automotive sector. According to the Institute for Public Policy Research (IPPR), over 25,000 jobs are at risk—particularly at firms like Jaguar Land Rover and Mini.

“Trump’s tariffs have huge potential to completely destabilise UK car manufacturing,” said Pranesh Narayanan, research fellow at IPPR. “However, this could also be a chance to refocus investment into green technologies.”

The US is the UK’s second-largest export destination for cars, with 16.9% of exports—worth £7.6 billion—heading there in 2024.

Narayanan added that with the right industrial strategy, the UK could pivot to green automotive innovation and potentially open new export markets.

Asian Markets Wobble as Tariff Anxiety Grows

Asia’s trading session was mixed, driven by tariff uncertainty and inflation concerns. The Hang Seng ended flat, while the Shanghai Composite gained just 0.05%. Japan’s Nikkei managed a 0.3% rise, but South Korea’s Kospi dipped 0.6% after inflation rose unexpectedly.

“Risk sentiment remains fragile as investors await tariff details,” said Tan Jing Yi of Mizuho Bank.

US futures pointed to a soft open for Wall Street. Futures for the S&P 500, Dow Jones, and Nasdaq were all in the red earlier today.

Despite this, US stocks finished Tuesday in positive territory. The S&P 500 rebounded 0.4% after an early dip, the Dow Jones closed flat, and the Nasdaq rose 0.9%.

Meanwhile, US bond yields edged lower. The 10-year Treasury yield fell to 4.177% after data revealed a contraction in American manufacturing activity last month.

What This Means for UK Traders

The FTSE 100’s slip, the volatility in global equities, and concerns over car tariffs all paint a picture of a tense and reactive market environment. With uncertainty running high, traders need to stay informed and prepared.

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