Is the president really ready to do battle with China after causing global chaos and undermining the US economy?

The US could breach the debt ceiling even sooner than predicted without action from RepublicansTrump backs down on tariffs, again. And it doesn't look strategic," a headline blared on Wednesday afternoon.At the end of trading, equities had recovered a portion of their losses. But plenty of damage had been done. Markets were thrown into turmoil, interest rates jumped and business activity took a hit. Beyond that, the possibility of a recession grew - and the possibility of a default by the US inched up to 6%, according to prediction markets. Continue reading...

The PM will not antagonise the unpredictable president, but it is clear to No 10 that Trump is the problem and the solution lies elsewhere

Lasting damage has been done not only to Trump's political credibility but to globalisation as a systemAt the beginning of this helter-skelter week, Downing Street was declaring globalisation not only dead but a failure. Now, only five trading days later, the autopsy is still under way but the victim may instead be economic populism, strangled by Wall Street, the citadel of globalisation. Donald Trump's so-called liberation day may in fact have been the anti-globalist's entombment day.In an effort to deny even a tactical retreat, Trump's aides insist the White House goal all along was not to weaken globalism, or even to protect the US economy with tariffs, but instead to get into a negotiation to lower tariffs around the world and to punish China. As cover stories go, it is hardly credible, partly because the tariffs were repeatedly lauded by Trump as a macroeconomic revenue-raising measure, or a means to bolster US manufacturing. Continue reading...

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S&P 500 and Dow Jones rise sharply after extraordinarily volatile week as experts warn of continued turbulenceDonald Trump insisted his trade war with much of the world was doing really well" despite mounting fears of recession and as Beijing hit back and again hiked tariffs on US exports to China.As the US president said his aggressive tariffs strategy was moving along quickly", a closely watched economic survey revealed that US consumer expectations for price growth had soared to a four-decade high. Continue reading...

This blog is now closed, you can read more on this story hereThe care minister has defended the government's cautious response to developments in global trade after the sweeping imposition of tariffs by the US administration in Washington.Stephen Kinnock said If we were to just jump in one direction or the other every time there's a new development, we would be jumping around all over the place. I don't think that that's going to be in the interest of our economy or of our national security or of our business community." Continue reading...

Experts say fears about unpredictable policy are creating crisis of confidence in US bonds once seen as risk free'Amid the global fallout from Donald Trump's liberation day" tariff announcement, it appears nowhere is safe. Crashing share prices, a sell-off in bonds and currency chaos erasing trillions of dollars of wealth in a matter of days.On Friday, the dollar fell by more than 1% relative to a basket of other currencies to reach its lowest level in three years, compounding an almost 10% slide since the start of the year. In the space of a week, it has lost about 3 cents against the pound and 4 cents against the euro. Continue reading...

Elizabeth Warren and other senators urge SEC to look into whether president engaged in market manipulationSeveral senior Senate Democrats have written a letter asking the Securities and Exchange Commission (SEC) to investigate whether Donald Trump violated securities laws and engaged in insider trading and market manipulation while switching course on his global tariffs.We urge the SEC to investigate whether the tariff announcements, which caused the market crash and subsequent partial recovery, enriched administration insiders and friends at the expense of the American public and whether any insiders, including the president's family, had prior knowledge of the tariff pause that they abused to make stock trades ahead of the president's announcement," said the letter, led by the Massachusetts senator and former presidential candidate Elizabeth Warren. Continue reading...

Adam Posen, former Bank of England policymaker, compared the tactics to Johnson and Nixon refusing to back downA leading US economist has likened Donald Trump's tariff battle with China to the Vietnam war, arguing that both sides will be caught in a quagmire and unable to find a face-saving exit.Adam Posen, the head of the Peterson Institute in Washington and a former Bank of England policymaker, spoke to the Guardian after penning an article for the US magazine Foreign Affairs. He said Trump's tactics had echoes of presidents Johnson and Nixon in the Vietnam war, unable to believe that they wouldn't win if they only upped the attacks, and unwilling to negotiate a real peace". Continue reading...

Spare a thought for those who are processing recent events

In a second term of fiat, flubbing and flip-flopping, Trump pursued his desire to wield a club over everyone and everythingBy imposing punitively high tariffs, Donald Trump was playing a high-stakes game of chicken with the US's trading partners - but it was Trump who chickened out and suspended his tariffs just hours after they took effect. The president couldn't ignore the worldwide economic havoc that he had caused singled-handedly - stock markets were plunging, business executives were panicking and consumers were seething.Eager to persuade manufacturers to build new plants in the US, Trump said on Monday that many of his tariffs would be permanent. But for Trump, permanent evidently meant two days. Continue reading...

February GDP rise was bigger than forecast - but impact from Donald Trump's tariff war is yet to come

Chinese leader canvasses Spain and other trading partners on how to tackle economic fallout as market turmoil continues

It would take an extraordinary deal' for any country to improve on 10% rate, says Kevin Hassett

Shoppers stayed away in March as footfall declined 5% and stores worry US trade war could have chilling effectShoppers stayed away from the UK high street in March, a situation retailers said could worsen if the economic gloom caused by Donald Trump's tariff war hits consumer confidence.Footfall fell 5% in March to extend a downturn in February that retailers said could be attributed to a recent rise in inflation and pressure on pay packets since a brief revival during the January sales. Continue reading...

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As China retaliates against tariffs, it is also making strategic manoeuvres on EU and Asia to maximise opportunitiesOn the basis of Napoleon's dictum never interrupt your enemy while they are making a mistake", there was a large incentive for China to do precisely nothing as Donald Trump displayed his determination to lose friends and induce market panic. Indeed, the Chinese advocates of passivity cited a social media meme attributed to President Xi Jinping: Do nothing. Win."Initially it was tempting for China to sit back and watch the US's former allies recoil at Trump's disruptive war on globalisation and let them realise that, by comparison, China represented an oasis of stability, modernity and predictability. Continue reading...

Sarah Breedon says too early to judge impact on inflation of most significant change in trade policy in a century'

Time will tell how much damage has been inflicted on the credibility of Trump's economic policy and administrationDonald Trump's climbdown on Wednesday from the most draconian aspects of his tariff regime has uncovered a damning picture of chaos at the heart of his presidency without necessarily alleviating their most painful effects.The president's landmark liberation day" unveiling of tariffs in the White House Rose Garden on 2 April was supposed to be symbolic gateway to his promised golden age of American greatness"; instead, it triggered a cascade of global market crashes that prompted warnings of a recession, or even a 1930s-style depression, while Trump brushed it all off as temporary disruption". Continue reading...

The president's U-turn after his maverick plan threatened meltdown has echoes of the 2022 UK crisisA maverick economic policy announcement from a self-styled disruptor plunges the country's currency into freefall and puts rocket boosters behind the cost of government debt, prompting warnings of an economic nuclear winter and forcing a pretty undignified U-turn.If, on top of general concern, there has been a nagging sense of deja vu in Britain over the past 24 hours, then the ill-fated 49-day reign of Liz Truss as the UK prime minister may well be to blame. Continue reading...

The 12-month inflation rate of 2.4%, down from 2.8% in February, was largely fueled by a sharp fall in gas pricesThe price of eggs continues to soar for American consumers, rising by almost 6% in March even as overall inflation fell slightly.Breaking a record high for the third consecutive month, the average cost of a dozen large eggs hit $6.23 in March - more than double the price just 12 months earlier, according to new figures released by the Bureau of Labor Statistics on Thursday. This surpassed the previous record highs of $5.90 a dozen in February, and $4.95 in January. Continue reading...

Asian and European markets rise amid signs trade war may not be as damaging to global economy as feared

The president's pausing of some tariffs has sent shares soaring but levies on imports remain at the highest level since the 1930s

US president posted it was a great time to buy' on social media just hours before pausing tariff impositions

China's 84% tariffs on US products come into force amid market relief after Trump pauses steep tariffs elsewhere

In today's newsletter: White House officials send mixed messages over Trump's stunning U-turnGood morning. Two main pieces of news from Donald Trump yesterday: he has rolled back water efficiency standards to make America's showers great again", because he likes to take a nice shower to take care of my beautiful hair"; and he has rolled back the exorbitant tariffs he applied to many countries last week to 10% - but increased them for China. No longer will showerheads be weak and worthless," the White House said. This will come as welcome news for the many investors who have recently been taking a bath.It was a pretty chaotic change, all told: there were contradictory messages from Trump's advisers on which countries would be affected, why he did it, and what Beijing should expect to happen next. Still, the markets breathed a large sigh of relief, and the S&P 500 had one of the strongest days of its postwar history. This morning, share indices in Asia have jumped in turn.Gaza | Israeli aircraft struck a residential block in war-ravaged northern Gaza on Wednesday, killing at least 23 people, including eight women and eight children health officials said, as the Israeli military is reportedly preparing to seize the entire city of Rafah.Trade | The UK and India have agreed 90% of their free trade agreement, businesses were told on a call with negotiators this week. There are hopes the UK government will succeed in finalising a highly coveted trade deal with India, a booming economy of 1.4 billion people, this year.Smartphones | Almost all schools in England have banned mobile phone use by pupils, according to a survey run by Rachel de Souza, the children's commissioner for England. Among 15,000 schools, 99.8% of primaries and 90% of secondaries have some form of ban.Defence | Hot weather is expected to bring highs of 24C to the UK as fire services continue to warn of wildfires across the country. The Met Office said temperatures would peak on Friday in London and south-east England, which could make it the hottest day of the year so far, while temperatures could hit 23C on Thursday.BBC | A controversial sculpture outside the BBC's headquarters has been restored and put back on display behind a screen after being vandalised, with the corporation saying it in no way condoned the abusive behaviour" of its creator, Eric Gill. There have long been calls for Gill's works to be removed since his diaries revealed he had sexually abused his two eldest daughters. Continue reading...

We examine potential consequences of US president's market chaos, which could reach every corner of global finance and economyDonald Trump may have stepped back from his huge tariff rises on every country, except China, which now faces 125%, but the impact of the market chaos is likely to continue in the UK and beyond. The rest of the world still faces a blanket 10% tariff on all US exports.While much of the focus has been the direct impact of the tariffs on physical goods, Trump's actions threaten to reach every corner of global finance and the economy. Continue reading...

Former PM says it is also the moment for the UK to go even further in renewing ties with the EU

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This live blog is now closedOne person probably more enthusiastic than most about the prospect of Universal opening a theme park in the UK is the Lib Dem leader Ed Davey. He is a great fan of outdoor activity-related photocalls, and he's been at it again today, and the Gloucester Ski and Snowboarding Centre in Matson, Gloucestershire.Almost 40 MPs and peers have signed a letter organised by Jeremy Corbyn calling for an independent inquiry into the government's role in the war in Gaza.Many people believe the government has taken decisions that have implicated officials in the gravest breaches of international law.These charges will not go away until there is a comprehensive, public, independent inquiry with the legal power to establish the truth.Last month, I wrote to the Prime Minister calling for an independent inquiry into the UK's involvement in Israel's assault on Gaza.Today, more than 30 MPs have supported that call. Continue reading...

As countries reel from the Trump tariffs, can a global recession still be avoided? Richard Partington reportsJust after midnight on Tuesday, EDT time, the wall of tariffs Donald Trump announced last week came into effect. The new system upends decades of precedent from the world's strongest economy and has sent global markets reeling.The Guardian's senior economics correspondent, Richard Partington, explains to Michael Safi the dynamics of a market crash and a trade war and how together they may contribute to the onset of a global recession. However, as he makes clear, the world is not yet in that worst-case scenario and steps can still be taken to minimise the risk. Continue reading...

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Chancellor says asking shoppers to prioritise UK products would make country too inward-looking'Rachel Reeves has declined to back calls for the UK government to launch a buy British" campaign in response to Donald Trump's tariffs, saying it would make Britain too inward-looking".However, Downing Street said the Cabinet Office was examining procurement rules and said there were already policies in place to incentivise using the government's purchasing power for British companies. Continue reading...

The move has sent shock waves through a region of US strategic importance that had respected Trump as tough on BeijingVietnam had tried to appease Donald Trump: tariffs on US goods were reduced; regulations were passed to allow Elon Musk's SpaceX to launch its Starlink in the country. The prime minister, Pham Minh Chinh, even joked in January that he would happily play golf all day long" at Trump's Mar-a-Lago home in Florida if it could bring benefits to my country and my people".The strategies do not appear to have worked. Trump has inflicted an extraordinary 46% tariff on Vietnam that threatens to devastate its economic growth plans and undermine relations between the two countries. The tariff has sent shock waves through Vietnam, a manufacturing powerhouse where Trump has always been fairly popular, and across south-east Asia. Continue reading...

Chinese foreign ministry calls comments by US vice-president ignorant and disrespectful'Beijing has hit back after the US vice-president, JD Vance, referred to Chinese peasants" in an interview defending Donald Trump's tariffs.Speaking to Fox News last week, Vance asked: What has the globalist economy gotten the United States of America? And the answer is, fundamentally, it's based on two principles - incurring a huge amount of debt to buy things that other countries make for us. Continue reading...

Chief economist Phil O'Donaghoe says global shock' from protectionist US trade policy justifies more aggressive move from Reserve Bank

A swift loss of 4tn from global stock markets has led some to liken Trump's trade war to 1929 Wall Street crash

Traders leaving the New York Stock Exchange were trying to make sense of another day of volatilityTraders leaving the New York Stock Exchange after the bell closed on Monday were sanguine about what had been, by an measure, a day of mood swings on Wall Street, as waves of volatility shook the stock markets, each one created by another deluge of headlines around Donald Trump's trade war and global economic uncertainty.The markets opened down a lot, then there was a rumor that the tariffs were off, and they went back up, then all bets were off again and it went down," said Steve Kos of Option Circle, who offered a series of trading day comparisons as he walked out on to Broad Street in lower Manhattan. Continue reading...

In today's newsletter: As Keir Starmer weighs up his response to Washington, the prime minister holds an unfavourable handGood morning. Everyone was very impressed when David nobbled Goliath with a rock to the forehead, but Keir Starmer might be forgiven for scoffing at how easy he had it. At least David got to choose his slingshot. In the global trade war, it is the large philistine in the White House who has picked the weapons - and in the hands of a relative minnow like the UK, the truth is that tariffs will barely make a dent.With that unpromising alternative on the horizon, Starmer spent yesterday talking about what he can do to help business at home, instead. But the changes he announced to support the car and pharmaceutical industries - even if they are backed up with more action later this week - also look trivial against the size of the task. And as the US president's latest threat to impose an additional 50% tariff on Chinese imports makes abundantly clear, there is no guarantee that it won't get bigger still.NHS | Hospitals in England could axe more than 100,000 jobs as a result of the huge reorganisation and brutal cost-cutting ordered by Wes Streeting and the NHS's new boss. The NHS Confederation, which represents trusts, estimates that an order to cut corporate functions by 50% could mean shedding between 3% and 11% of the workforce.Gaza | Autopsies conducted on 15 Palestinian paramedics and civil emergency responders who were killed by Israeli forces in Gaza show they were shot in the upper body with intent to kill", according to the Palestinian Red Crescent, which is demanding an international investigation into the attack.Conservatives | One of the Conservatives' biggest donors has stopped funding the party in a move insiders believe will result in the closure of its northern HQ, the Guardian can reveal. Richard Harpin, the founder of home repairs business HomeServe, has donated 3.8m to the party since 2008 and loaned Rishi Sunak a helicopter during the last election campaign.Asylum seekers | At least 250 people who were detained at Manston asylum centre when it was dangerously overcrowded are suing the government for unlawful detention and other breaches of their rights. They include a woman who had a miscarriage and a teenager who was a victim of torture and trafficking.Fertility | Surgeons are hailing an astonishing" medical breakthrough as a woman became the first in the UK to give birth after a womb transplant. Grace and Angus Davidson named their daughter Amy Isabel after Grace's sister Amy, who donated her own womb, and Isabel Quiroga, a surgeon who helped perfect the technique. Continue reading...

Beijing accuses US of blackmail and adding a mistake on top of a mistake' as Wednesday deadline for latest levies looms

Ex-Bank of England deputy governor Charlie Bean says cut of 0.5 points needed because of crazy situation' in USThe Bank of England should use its meeting next month to cut interest rates by at least half a percentage point to 4% in response to the financial turmoil created by Donald Trump's trade tariffs, the former deputy governor Charlie Bean has said.He believes an aggressive strategy is needed to combat the fallout from Trump's tariff war, which has knocked trillions of pounds off global stock markets, undermining business and consumer confidence. Continue reading...

This blog has now closed. You can read more of our US politics coverage hereEU ministers are in Luxembourg to consider the European Union's response to Trump's sweeping tariff regime amid continuing market turmoil and heightened fears of a global economic recession.It comes after Trump doubled down on his tariff policy in comments aboard Air Force One overnight. He said Europe has treated us very, very badly," and has taken our leaders for a ride", and declined to hold talks on changing tariffs unless they pay us a lot of money on a yearly basis". He also repeated criticism of Europe for not spending a fair share on Nato. Continue reading...

New Civil Liberties Alliance says president's invocation of emergency powers to impose tariffs is unlawful

John Bailey does the sums on the 10% tariff imposed by the US, and Lee Wilkinson has a Crocodile Dundee momentNot surprisingly, Labour ministers are claiming the imposition of only" a 10% across-the-board tariff on UK exports to America (excluding steel, aluminium and automobiles, already hit with a 25% rate) as vindication of their diplomatic skill in dealing with Donald Trump(It could've been much worse': how UK avoided a bigger blow from Trump tariffs, 5 April).In fact, the figure of 10% owes less to diplomacy and rather more to the method used to calculate the tariff. The algorithm applied is simple (and simplistic) in the extreme: the tariff equals either the total deficit in US trade with a particular country, divided by the value of that country's exports to America and then halved, or a default 10%, whichever is larger (Trump's idiotic' and flawed tariff calculations stun economists, 3 April). Continue reading...

US president tells reporters foreign governments will have to pay a lot of money' to lift levies

The value of one Australian dollar dropped to a low of 59.64 US cents, its lowest point since April 2020

In today's newsletter: Why the global sell-off continued in earnest this morning - and why it mattersGood morning. The markets might have been closed over the weekend, but the break has offered little respite for those who might have hoped for some sign that Donald Trump would consider a change to his tariffs policy.With White House officials and the president himself insisting that their plan was the right one despite the global economic meltdown it has induced, the market sell-off in response continued in earnest this morning in Asia - and traders in Europe and the US will be braced for more of the same later today.War crimes | A war crimes complaint against 10 Britons who served with the Israeli military in Gaza is to be submitted to the Met police by one of the UK's leading human rights lawyers. Michael Mansfield KC is one of a group of lawyers behind a dossier alleging targeted killing of civilians and aid workers.France | The French far-right leader Marine Le Pen has told supporters in Paris she would fight a political, not a judicial ruling" that could bar her from the next presidential election, as a rival rally denounced an existential threat" to the rule of law after her conviction for embezzling public funds.UK politics | Labour and the Tories have become embroiled in a war of words after the Conservative leader, Kemi Badenoch, defended Israel's decision to deny two MPs entry into the country and deport them. MPs from across parliament criticised Badenoch for her response to Israel's decision to expel the Labour MPs Yuan Yang and Abtisam Mohamed.Deaths in custody | More than 100 relatives of people who have died after contact with the police in the UK since 1971 have joined plans for a class action lawsuit in pursuit of compensation and justice. Organisers had recorded 3,000 deaths involving the police in the UK over the past 50 years, during which time four police officers have been convicted over a killing.Olivier awards | The play Giant, which portrays children's author Roald Dahl amid an outcry about his antisemitism, has triumphed at the Olivier awards on a star-studded night at the Royal Albert Hall in London. Among three awards for the production, US star John Lithgow took home the best actor prize for his performance as Dahl. Continue reading...

Carmakers will be given more flexibility over targets on transitioning to electric vehiclesKeir Starmer has said the government will step in to support key British industries, as business grapples with the economic turmoil unleashed by Donald Trump's global tariffs.As the government attempts to counter the impact of the White House hitting the UK with a 10% base levy on exports to the US, the prime minister will promise to help shelter vulnerable sectors and will implement key parts of the industrial strategy months early. Continue reading...

Kevin Hassett claims tariffs will not have a big effect on US consumers and there will be no political coercion' over interest ratesStarmer orders economic reset amid Trump's tariff mayhemIndonesia, Southeast Asia's largest economy which faces a 32% tariff rate, said it will not retaliate against the levies and would instead pursue diplomacy and negotiations to find mutually beneficial solutions. Jakarta has said it would send a high-level delegation to the US for direct negotiations with the government.Cambodia asked the US government on Friday to postpone the 49% tariff rate on its products, the highest rate in Asia and second-highest globally.Vietnam's leader To Lam and Donald Trump agreed on Friday to discuss a deal to remove tariffs (Vietnam will be subject to a 46% tariff).Brazil, which faces a 10% levy on its exports to the US, has said its government is evaluating all possible actions to ensure reciprocity in bilateral trade, including resorting to the World Trade Organization, in defense of legitimate national interests".Taiwan's top financial regulator said this morning it will impose temporary curbs on short-selling of shares to help deal with potential market turmoil brought resulting from the new import tariffs. Taiwan's government said on Thursday that the new 32% tariff rate levied on the island were unreasonable and it would discuss them with Washington.China has hit back hard against Trump's imposition of 34% tariffs on Chinese goods, which were already subject to a 20% levy, taking the total levy to 54%. Beijing in turn announced a slew of countermeasures, including extra levies of 34% on all US goods and export curbs on some rare earth minerals.Canada announced a limited set of counter measures against the latest US tariffs. The new Canadian prime minister Mark Carney said the government will copy the US approach by imposing a 25% tariff on all vehicles imported from the US that are not compliant with the US-Mexico-Canada trade deal (Canada and Mexico were exempt from Trump's latest duties because they are still subject to a 25% tariff related to the US fentanyl crisis for goods that do not comply with the US-Mexico-Canada rules of origin). Carney says Canada will retaliate against unjustified, unwarranted" tariffs.The Israeli prime minister, Benjamin Netanyahu, is set to travel to Washington to meet with his close ally, US president Donald Trump. Continue reading...