Markets brace for volatile week as most punitive tariffs take effect

Markets are braced for another rollercoaster week, as the most punitive of Donald Trump's "weapon of mass destruction" tariffs kick in and world leaders weigh up retaliatory action, fuelling fears of global recession.

- Rob Davies

Stock indices plunged by nearly $5tn (£4tn) last week, and UK and US markets suffered losses not seen since the early days of Covid, as investors took cover from the opening salvos of a global trade war.

With no sign of the Trump administration rethinking its so-called "Liberation Day" tariffs, analysts warned of persistent market turbulence and an increased risk of all-out recession in the US, UK and EU.

"Volatility will likely stay elevated as we move into next week," said Roman Ziruk, a senior market analyst at the global financial services firm Ebury.

He said some investors were holding out hope tariffs against China and the EU, due to take effect from Wednesday, would be delayed or remodelled. "The danger of escalation of trade tensions cannot, however, be overlooked, particularly as China's response to the latest round of US tariffs has been more aggressive than before," he said.

China hit back hard against Trump on Friday, accusing him of "bullying" and slapping 34% of additional tariffs on all goods imported from the US.

EU leaders are still considering their response.