Is the US running a $1 trillion deficit with China?published at 17:56 British Summer Time 7 April

17:56 BST 7 April

By Gerry Georgieva

During the 15 minutes that President Donald Trump spoke to reporters last night, he claimed that the United States was running a $1tn trade deficit with China.

He's just announced that he plans to hit Beijing with an extra 50% tariff unless it drops retaliatory levy

We can’t find any evidence for his claim, which he made several times

The US does run a trade deficit with China, meaning that it imports more in goods from that country than it exports to it, but the figure was just over $295bn for 2024, external.

Globally, in 2024, China exported nearly $1tn more goods, external than it imported so it’s possible that Trump may have been mistakenly referring to this figure.

Mitchell Labiak
BBC Business reporter

Europe’s biggest stock markets have all closed over 4% down after another hectic day following Trump’s tariff announcements.

The FTSE 100 index - made up of the largest firms listed in the UK - sunk 4.4% after the day’s trading while the German Dax dropped 4.1% and the French Cac 40 fell 4.8%.

To give you a sense of just how grim today was for the FTSE 100, only five stocks ended the day in the green - and by some pretty thin margins. Mexican mining firm Fresnillo was the biggest winner on a bad day, rising 1.3%.

All of this underscores just how damaging these tariffs could be for the wider economy, with investors selling shares as they predict the profits of firms from all kinds of industries will be hit.

That could mean companies cutting back and raising prices - hitting workers and consumers.

Natalie Sherman
New York business reporter

Trump has just threated to hit imports from China with an additional 50% tax, unless Beijing withdraws the retaliatory measures it announced last week.

That would come on top of the 34% tariff he announced on goods from China last week, which themselves added to the tariff of at least 20% the White House has imposed since January.

If enacted, many US companies bringing in goods from China could face a tax of at least 104% - roughly doubling their cost in a matter of months.

Trump has responded to retaliation with similar enormous escalatory threats before.

Recall his threat to hit alcohol from Europe with a 200% tax; or place a 50% tariff on Canada’s steel and aluminium.

In both those cases, the two sides reached a kind of détente and the hikes never materialised.

But those clashes involved longstanding allies. China has been a target of Washington before Trump.

And despite clear signals from the White House that it is interested in cutting a deal around tariffs and TikTok, Beijing has yet to show much interest in negotiating.

Natalie Sherman
New York business reporter

Markets are panicked by Trump’s tariffs – and there’s no question why.

The plans have introduced a huge new cost for many companies, one that is sure to shrink their profits, if not wipe them out entirely.

That’s bad news for everyone invested in the stock market, which polls suggest amounts to about 60% of Americans, thanks to exposure in retirement accounts.

That does not, however, mean that 60% of Americans are poised for huge losses.

The wealthiest Americans own the most stock – in fact, the Federal Reserve estimates that about 90% of the markets' trillions are owned by the top 10% wealthiest Americans, who as of 2022 had typical holdings worth more than $600,000 (£471,230).

By comparison, those in the bottom half of the wealth distribution typically had only about $12,600 tied up in the markets.

That can explain why it is not difficult to find some voices who are feeling relatively sanguine about the market turmoil, as my colleague Mike Wendling uncovered.

On the other hand, if the market falls prompt the wealthy to hunker down and save, it could have big effects on the wider economy, much of which relies on their spending.

US President Donald Trump says he will impose additional tariffs on China, from Tuesday, if Beijing does not withdraw its 34% retaliatory tariffs on the US.

The additional tariffs on Beijing would be of 50%, Trump says.

As a reminder, China announced on Friday that it would be imposing such tariffs on Washington after the White House said that from 9 April it'd put 34% levies on all goods from Beijing.

Image source, Getty Images

UK Prime Minister Keir Starmer has called for "cool heads" as global markets slumped once more on Monday in response to President Donald Trump's tariffs.

Global supply chains are experiencing widespread shockwaves. The UK's FTSE 100 hit its one-year low when markets opened this morning, while Asian markets suffered their worst day in decades.

US markets opened low for a third trading day in a row, reflecting significant instability in the markets as the White House's "baseline" 10% tariffs came into force (5 April) and days before further levies on the "worst offenders" come into force.

Since the start of trading, the three main US stocks went up and down - with the jump being reportedly linked to now denied claims that Trump was considering a 90-day pause on tariffs.

Speaking at the same time as US markets opened, Starmer reiterated that "nobody wins from a trade war", adding that now is "a moment for urgency," and the government would relax its electric vehicle (EV) sales targets in response to tariffs.

The EU's chief, Ursula von der Leyen says the bloc has offered "zero-for-zero" tariffs for industrial goods it exports to the US, adding that the EU is "always ready for a good deal".

Donald Trump is continuing to defend his tariffs policies over on Truth Social.

In his most recent update, the president says "countries all over the World are talking to us" and that "tough but fair parameters are being set" in those negotiations.

Trump adds that he has spoken to the Japanese Prime Minister Shigeru Ishiba this morning, and says that the country has treated the US "very poorly on trade".

"They don’t take our cars, but we take MILLIONS of theirs. Likewise Agriculture, and many other '"things".

"It all has to change, but especially with CHINA!!!", he adds.

Image source, Getty Images

Investors in the US are jumpy. Just how jumpy?

For about 10 minutes, the S&P 500, the Dow Jones and the Nasdaq were suddenly up – jumping more than 5% in a matter of minutes - apparently responding to reports that Trump was considering a 90-day pause on the tariffs.

The White House has now denied the report, external, calling it "wrong" and "fake news".

It appears to have been prompted by some optimistic interpretation of an interview with one of Trump’s top economic advisers, Kevin Hassett, on Fox News this morning.

And the sell-off has resumed.

It may have been all smiles at the traditional morning opening of the New York Stock Exchange (better known as Wall Street) earlier - but the news from a market perspective remains grim for a third trading day running.

As we've been reporting, trading has opened down 3.99% for the Dow Jones, 4.21% on the Nasdaq, and 4.18% on the S&P 500 - the three main Wall Street indexes indicating the value of stocks in major US companies.

The job of ringing the bell is symbolic and often features high-profile appearances - Donald Trump himself rang the bell in December last year.

Today, it was Joan Woodward, president of the Travelers Institute, a business and financial policy think tank.

Image source, Getty Images

European Commission chief Ursula von der Leyen says Europe is ready to negotiate with Washington, as they've offered "zero-for-zero tariffs" for industrial goods the bloc exports to the US.

The bloc is "always ready for a good deal", she says, adding that they are prepared to respond with countermeasures.

As a reminder, the EU was identified by President Donald Trump as one of the "worst offenders" and it'll face 20% tariffs on goods it sells to the US. It's also subject to 25% tariffs on its steel, aluminium and derivative products.

Von der Leyen says the EU will "protect ourselves against indirect effects through trade diversion".

Image source, Reuters

The S&P 500 tracks 500 of the biggest firms in the US, making it one of the widest measures of the US stock market.

It has dropped again at the opening, suggesting a fall of roughly 13% since Trump announced his tariffs.

If the drop holds at the end of the day, that will put it down roughly 20% since its most recent high in February - a milestone officially known as a bear market.

• What's a bear market? A description of a market that appears to be more likely to go down than go up

The Nasdaq index, where many tech firms are listed, plunged into a bear market last week. And the Dow Jones Industrial Average, the other major index in the US, is close.

Recessions often, though not always, follow bear markets.

Were we off track to hit the government’s electric vehicle targets?published at 15:13 British Summer Time 7 April

15:13 BST 7 April

Image source, PA

By Ben Chu

As we've reported, the UK government is set to relax its electric vehicle (EV) sales targets in response to new US tariffs.

Under the existing Zero Emission Vehicle mandate, the government set a target for fully electric vehicles (excluding hybrids) to make up 28% of new car sales in 2025, rising steadily to 100% by 2035.

The average share between January and March was 21%.

On the face of it, the car industry was broadly on track for the government’s targets, external.

Last year the target was 22%, but actual EV sales reached just 19.6%. However, existing flexibilities - like credits for low-emission petrol and diesel cars - meant that the target was still technically met and no car makers were fined.

But there are concerns.

The Climate Change Committee (CCC) - in its 2024 progress report - noted that the EV rollout pace had slowed., external

While carmakers had outperformed the CCC’s net zero “milestone” pathway for several years - which tracks the uptake of low-carbon technologies, rather than setting legal sales targets - progress dipped in 2023.

As a result, the CCC warned that the EV rollout is now “slightly off track".

As the PM ends his speech, the BBC's political editor Chris Mason asks him if it's possible to shield the public from Trump's policies.

"Nobody welcomes tariffs", Starmer says once again, but he also highlights the need to "seize" the opportunity from the situation.

Starmer says there are two things to be done:

• Supporting the UK's economy
• And having discussions with others about lowering trade barriers across the world

"We have to step into that space and be prepared to lead for Britain."

Meanwhile, the sell-off in US stocks means there's no respite for other markets, and shares in Europe are still down heavily for the day.

A short while ago the FTSE 100 index was down 4.4% for the day, Germany's Dax index was 4.7% lower while France's Cac 40 had fallen 4.7%.

As part of the UK's response to tariffs, Prime Minister Keir Starmer says a 2030 ban on hybrid cars is too soon - and he'll be pushing it back to 2035.

"That's a new step that we're taking," Starmer adds.

He says cleaner and efficient petrol cars sold before 2030 will also count towards businesses' electrical vehicle mandates.

A ban selling new petrol and diesel cars will still come into effect in 2030, but manufacturers will now have more flexibility on annual targets and face lower fines.

In addition, Starmer says, £2.3bn will be pushed into the British car industry, which will give people tax breaks - an important factor for those considering making the switch to electric vehicles.

Starmer says the UK will "keep calm" and "fight for the best deal with the US" - which he says they have been discussing "intensely" over the last few days.

He adds that the government will also work with key partners to reduce barriers to trade across the globe, and to accelerate trade with the rest of the world, and champion the cause of free and open trade.

Starmer says the UK will only strike a deal with the US if it's in the country's national interest.

Prime Minister Keir Starmer reiterates that these are "challenging times" but asks the workers to read "intent" into the fact that he and the chancellor are showing up - just days after Trump's tariff announcement.

"But it's also a moment for urgency, because we've got to rise together as a nation to the great challenge of our age - and it is the great challenge - which is to renew Britain so we're secure in this era of global instability."

He tells Jaguar Land Rover workers "we are going to back you to the hilt" and he promises to "fight for the future" by rewiring the economy so that it serves "in the interests of working people".

Back in New York, the main US indexes have slid further in the first few minutes of trade.

The Dow Jones is now down 4.4%, the S&P 500 has lost 4.7% while the Nasdaq has fallen 5%.

As the US markets open, the chancellor and the UK Prime Minister are addressing tariffs for the first time alongside Jaguar Land Rover chief executive Adrian Mardell.

Reeves reiterates that the UK will take a cool-headed approach in this "new era" that is guided by national interest.

Reeves says the government wants to provide clarity and certainty for manufacturers.

JLR has already announced it will "pause" all shipments to the US as it works to "address the new trading terms" after tariffs were imposed.

The bell has rung on the New York Stock Exchange and trading is under way again.

In the first few moments of trade the S&P 500 is down 3.4%, the Dow Jones is 3.1% lower, and the Nasdaq has fallen 4.1%.