UK PM Keir Starmer in talks with world leaders as stocks fall after Trump's tariffs

The UK's FTSE 100 suffered its worst day since the start of the pandemic as Keir Starmer agreed that "like-minded countries must maintain strong relationships" in the wake of Donald Trump's tariffs.

Trading across the world has been hammered in the aftermath of the US president unveiling his full range of import taxes on countries around the world.

The Prime Minister spoke to the leaders of Australia and Italy on Friday – the first in a series of calls expected with world leaders over the weekend – as nations reel from the economic hit. London's top stock market index shed 419.75 points, or 4.95%, to close at 8,054.98 on Friday, the biggest single-day decline since March 2020 when the index lost more than 600 points in one day.

From Saturday, UK goods imported into the US will be subject to a 10% import tax, and the car industry has already been hit with a 25% levy which came into effect in the early hours of Thursday morning.

Downing Street has said that Sir Keir, Anthony Albanese and Giorgia Meloni "all agreed that an all-out trade war would be extremely damaging". Issuing a readout of the separate discussions on Friday, a Downing Street spokesperson said the PM "has been clear the UK's response will be guided by the national interest" and officials will "calmly continue with our preparatory work, rather than rush to retaliate".

"He discussed this approach with both leaders, acknowledging that while the global economic landscape has shifted this week, it has been clear for a long time that like-minded countries must maintain strong relationships and dialogue to ensure our mutual security and maintain economic stability," the spokesperson added. "They all agreed that an all-out trade war would be extremely damaging and is in nobody's interests, while agreeing to keep in close contact in the coming days."

It is expected that Sir Keir will take further calls with counterparts over the weekend. All but one stock on the FTSE 100 fell on Friday, with Rolls-Royce, banks and miners among those to suffer the sharpest losses. 

Trump claimed on Thursday that Sir Keir was "very happy" with Britain's treatment over tariffs, telling reporters on board Air Force One that the pair "have a very good dialogue". 

Number 10 contradicted the characterisation, and said the UK is "disappointed" by the President's decision. 

Asked on Friday whether Trump's characterisation was accurate, a Downing Street spokesman said: "We're disappointed by the tariffs that have been brought in. "Clearly, there will be an economic impact from the decisions the US has taken, both here and globally, but both the Prime Minister and the Business Secretary have been very clear over the last 24 hours that we will continue to act in the best interests of the UK, and we're prepared to do so." 

Analysts for AJ Bell estimated that about 4.9 trillion US dollars (£3.8 trillion) had been wiped off the value of the global stock market since the US president announced his tariffs on Wednesday evening. 

"China's retaliation to Trump's latest round of tariffs means that both sides are not backing down. 

"It caps off a horrible week for financial markets and dragged share prices even lower," AJ Bell investment analyst Dan Coatsworth said. "The escalation in tariffs is bad for US companies who buy goods from China, and vice versa, because their costs will go up. 

"It's also bad for the world in general as we now have a repeat of the heightened geopolitical tensions between the US and China which dominated Trump's first term in office. 

"The rapid pullback in stocks and shares over the past few days has put a dent in people's investments, including those in the US who were meant to have benefited from Trump's actions. 

"Instead, his tactics have caused shockwaves in every corner of the world." Wall Street was also facing another punishing day of trading on Friday, with US stocks tumbling after both the S&P 500 and Dow Jones indexes suffered their worst days since 2020. The S&P 500, which tracks the country's leading listed companies, was sliding by about 4% to 5,179 when European markets closed. This took the index down to its lowest level since August last year.

The Dow Jones, which tracks 30 large US companies, had also plunged 3.6%, while the technology-focused Nasdaq index was also dropping about 3.6%. Ministers are still hoping for a deal with the US that could secure some exemption from the tariffs, with Sir Keir promising businesses on Thursday that he would "fight for the best deal for Britain".

Ministers have so far avoided criticism of Trump as they seek to secure an agreement with America. However the Government has drawn up a list of products that could be hit with tariffs in retaliation and is consulting with businesses on how any counter measures could impact them. Rachel Reeves said on Friday that the Government is "determined to get the best deal we can" with Washington. 

"Of course, we don't want to see tariffs on UK exports, and we're working hard as a government in discussion with our counterparts in the US to represent the British national interest and support British jobs and British industry," the Chancellor said. However, she declined to give a timeframe for when she expected those discussions to bear fruit.