Good morning and welcome back to the City AM liveblog. Market sentiment is once again being reshaped by tariff developments, with the FTSE 100 poised for a decline following President Donald Trump's latest trade offensive.
Supreme Court Ruling Overturned by Emergency Legislation
Last Friday, the FTSE 100 experienced a notable surge after the US Supreme Court invalidated Trump's 'Liberation Day' tariffs, deeming the authority he used as unlawful. This decision provided a significant boost to global markets, offering a brief respite from trade tensions.
However, the relief was short-lived. Within 24 hours, Trump retaliated by invoking emergency legislation to increase the base tariff on global trading partners from 10% to 15%. This move has sent shockwaves through financial circles, particularly impacting the UK, which had previously secured preferential treatment at the lower 10% rate.
Impact on UK Businesses and Trade Relations
The new 15% tariff hike applies uniformly to all nations, as mandated by the non-discriminatory requirements of the emergency legislation. This shift has drawn sharp criticism from the business community. The British Chambers of Commerce issued a stern warning, stating that the increased tariffs would be "bad for trade, bad for US consumers and businesses, and weaken global economic growth."
High-level discussions are reportedly underway between the UK and US governments in an effort to mitigate the fallout. Yet, this latest twist in Trump's trade narrative threatens to unsettle markets once again, unless a reversal—often referred to as a TACO—occurs.
The TACO Phenomenon: Trump's Erratic Trade Policy
Investors have coined the term 'Trump Always Chickens Out' (TACO) to describe the president's unpredictable trade maneuvers, which are frequently rolled back after initial announcements. The question on everyone's mind is whether Trump will prepare another TACO feast by retracting these tariffs, or if this hike will stand firm, further destabilizing international trade.
We will continue to bring you the latest market updates and in-depth analysis throughout the day. In the meantime, here are some of our top stories from yesterday:
- 'Drastic' Dave to serve up new vision for Guinness maker Diageo
- Tories pledge to cut 'eyewatering' interest on some student loans
- UK and Trump in new tariff discussions as businesses sound alarm
- Trump says he is raising global tariffs after Supreme Court ruling
- Thousands of entrepreneurs quit the UK in the past two years, says wealth manager
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