China hits US with 125% tariffs — as it happened

The company says it will pause production at the hub after the US president imposed a 25 per cent levy on Canada’s automotive sector.

Unifor, which represents workers at the factory, said production would end until October.

The union believes the measures will result in the permanent sacking of almost 500 staff.

Donald Trump will “punch back harder” against China as the trade war between the two countries escalates, the White House press secretary said.

Karoline Leavitt said the US president “hopes to make a deal that benefits the American worker and our companies that have been ripped off for far too long”.

“Taking on China, in the terms of trade and tariffs, is something that both Democrats and Republicans alike have spoken about for decades. President Trump is finally doing it,” she said.

Asked whether she expected other nations to support the US in its trade dispute with Beijing, Leavitt cited Israel, South Korea, Japan, Vietnam and Italy as countries that had made contact with Trump.

“They need the United States of America, they need our markets, they need our consumer base,” Leavitt added.

The White House has claimed President Trump’s decision to pause levies was a “reward” for countries that sought dialogue instead of threatening the US with retaliation.

Karoline Leavitt, the White House press secretary, pushed back at suggestions that Trump had “blinked first” after a market downturn earlier this week.

“More than 75 countries have now reached out to the Trump administration, eager to address the trade issues that have exploited America and hurt out workers in the process,” Leavitt said.

“Phones have been ringing off the hook to make deals, and these countries wisely heeded President Trump’s warning not to retaliate and as a result they were rewarded with a 90-day pause in substantially lower reciprocal tariff rates.”

The EU had threatened to raise tariffs on the US, prompting Washington to cut duties on European goods to 10 per cent.

Elon Musk’s Tesla has suspended new orders of its electric vehicles in China.

The carmaker stopped accepting purchases for its Model S and Model X on its Chinese website hours after the US president slapped a 145 per cent tariff on imports from Beijing.

Orders for the two models — both American-made — have been removed from Tesla’s WeChat channel, China’s main platform for online sales, Reuters reported.

Just as everything seemed to be settling down in the UK property market, tariff turmoil has hit.

On April 1, 24 hours after stamp duty shot up, President Trump launched the global trade war that has unleashed uncertainty around the world. America’s about-turn, a 90-day pause in the higher rate of “reciprocal tariffs”, was a shot in the arm for the FTSE 100 and 250, which recovered to more than 8,000 points on Wednesday.

However, given the president’s propensity to make seemingly contradictory announcements at a whim that can change the prospects of global economies, what is clear is that we have entered a period of unprecedented unpredictability which makes it near-impossible for people to plan what to do when making big decisions with their money. What does this mean for those hoping to buy or sell property, or take out a mortgage?

● Read in full: Will Trump’s tariffs hit the UK property market?

A “clever government” should not pick a side in the US and China trade dispute, the China-Britain Business Council’s chairman has said.

Sherard Cowper-Coles called on Sir Keir Starmer to work towards lifting tariffs on vehicle exports to America, while continuing to engage and buy from Beijing.

“The US is still our largest trading partner, the EU is our next-largest trading partner and China is very close to that,” he said.

“We need to engage with all three and a clever government, an agile government, which is what this government has been.”

Cowper-Coles, who met President Xi two weeks ago, added: “China has got many of the technologies of the 21st century, and China is very efficient at manufacturing. We sell services, we sell Range Rovers, we sell Burberry, we sell pharmaceuticals to China …

“We get manufactured goods that are produced way below the cost it would be if they were made in factories here in the UK or in the United States.”

President Trump’s tariff regime is intended to affect every corner of the globe but there is one group that may not have been expecting a direct hit to their finances: the Maga faithful.

Since Trump successfully ran for the presidency a decade ago his supporters have spent millions on campaign merchandise, most famously red caps emblazoned with “Make America Great Again”.

Though caps bought directly from the Trump campaign, often for $40 or more, have since 2019 been “100 per cent proudly made in the USA” by a supplier in California, overseas vendors have flooded the market with cheap copycats.

• Read in full: Trump’s tariffs make Maga hats more expensive

President Trump’s trade adviser on Friday encouraged Americans to buy US stocks.

In an interview on the Fox Business Network, Peter Navarro predicted the administration “would make 90 deals in 90 days”, alongside the “broadest tax cut in American history”.

Urging fellow citizens to invest in Wall Street, he claimed: “If you’re not long, you’re going to get left behind”.

On Tuesday, Navarro was called a “moron” by Elon Musk, the Tesla chief executive, signalling a growing division among Trump’s closest allies during a week of market turmoil.

The chief executive of the investment firm BlackRock has warned the US is “very close, if not in a recession now”.

Larry Fink told CNBC he believes “the United States, post-World War Two, was a global stabiliser. We are [now] a global destabiliser”.

Despite President Trump pausing his so-called reciprocal tariffs on Wednesday, Fink warned this still could lead to “longer, more elevated uncertainty” for financial markets.

“This is not a pandemic, this is not a financial crisis. This is something that we’ve created,” he said.

Mexico will send water to Texan farmers immediately, President Sheinbaum has announced after her country came under US fire.

President Trump had threatened to impose tougher tariffs on America’s southern neighbour, accusing it of breaking a treaty on water supplies linked to three major rivers.

The EU is considering taxing US tech firms if talks with President Trump fail to bring down levies on European goods, the European Commission’s president told the Financial Times.

“We are developing retaliatory measures,” Ursula von der Leyen said, adding this could include taxing digital advertising revenue for companies like Google and Meta.

“There’s a wide range of countermeasures … in case the negotiations are not satisfactory,” she added.

Sir Ed Davey has called for a “serious plan for the sustainable future of domestic steel production” in response to President Trump’s sweeping new tariffs on UK imports.

The Liberal Democrat leader warned that the 10 per cent tariff on all UK goods exported to the US —alongside a 25 per cent duty on steel and aluminium announced in March — could cause “economic turmoil”.

He added: “I hope, across all sides of the House, that this message is understood and embraced.

“We Liberal Democrats stand ready to help constructively bring about an outcome that delivers real change.

“All politicians would do well to remember the country is watching.”

President Sheinbaum of Mexico has said her country is looking for alternatives to comply with an 81-year-old water treaty with the United States.

Mexico has fallen short on its water deliveries to its northern neighbour, prompting President Trump to threaten Sheinbaum with more tariffs. “Mexico has been stealing the water from Texas Farmers,” he claimed.

Trump accused Mexico of failing to provide 1.3 million acre-feet of water from three rivers — the Rio Grande, the Colorado and the Tijuana, as set out in a 1944 treaty.

“Mexico is unfortunately violating their Treaty obligation,” he wrote on his social media platform Truth Social.

The president added: “We will keep escalating consequences, including TARIFFS and, maybe even SANCTIONS, until Mexico honours the Treaty, and GIVES TEXAS THE WATER THEY ARE OWED!”

Ireland’s deputy prime minister has said this weekend’s negotiations between the European Union and the United States are essential to prevent a trade war.

“This is a vital weekend, and I think there isn’t an hour to lose, because we have a 90-day pause,” Simon Harris said.

“But 90 days can come and go quickly, and it’s really important that there’s very intensive engagement now between Europe and between the United States.”

Harris said that while he welcomed the pause, the 10 per cent base tariff and 25 per cent tariff on British cars, steel and aluminium were less than ideal.

Maros Sefcovic, the European Commissioner for trade and economic security, will travel to Washington on Saturday to meet US officials.

President Trump has chosen to effectively ignore China’s latest move on trade tariffs with the United States.

In his first comments since China retaliated with 125 per cent tariffs on US goods, he posted on Truth Social on Friday: “We are doing really well on our TARIFF POLICY. Very exciting for America, and the World!!!. It is moving along quickly.”

The dollar was down against the pound with sterling trading up by 0.82 per cent to $1.31, while the euro and the yen were also up against the dollar. Brent crude, the oil benchmark, was down 0.33 per cent at $63.05 a barrel.

US markets opened slightly lower on Friday, with the S&P 500 index down by 0.57 per cent, while the Nasdaq dropped by 0.43 per cent. The Dow Jones Industrial average fell by 0.69 per cent.

The fall came as China said it would increase its retaliatory tariffs on US goods to 125 per cent, in the latest escalation of the trade war between the world’s two biggest economies.

William Reinsch, who was the under secretary of commerce during the Bill Clinton administration, said China and the United States will eventually agree to a trade deal, but no one wants to be seen to make the first move.

“Think of it as a sumo wrestling match,” Reinsch, who is now at the Centre for Strategic and International Studies, told Times Radio. “You’ve got these enormous 400 pound people doing a lot of foot stomping and frowning and throwing rice around and they’ll get to the belly bumps.

“Our assessment is both sides want to do a deal, probably the Americans more than the Chinese. They don’t know quite how to get there.

“Nobody wants to be the first and so they have to figure out a way to get to the table without making it look like one is the weaker party. It will take a while, but they’ll figure it out.”

Jamie Dimon, the chief executive of JPMorgan Chase, has warned that the US economy is facing “considerable turbulence” amid the escalating trade war between the US and China.

The boss of one of the world’s largest banks said the firm was preparing for a wide-range of scenarios stemming from the “potential negatives of tariffs and trade wars”.

“The economy is facing considerable turbulence [including geopolitics], with the potential positives of tax reform and deregulation and the potential negatives of tariffs and ‘trade wars’, ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility,” he said. “As always, we hope for the best but prepare the firm for a wide range of scenarios.”

Dimon, who earned $39 million last year, has been subdued in his criticism of the second Trump administration, but his latest comments acknowledge that the tariff stand-off could have significant repercussions for the world economy.

The Character Group expects to feel the impact of US levies in the second half of its financial year

Peppa Pig has become the latest porcine casualty of the tariff war.

Days after Marks & Spencer warned that US import levies threatened its ambition to bring Percy Pig sweets to America, The Character Group — which owns licensing rights to Peppa and a host of other children’s favourites — has had to pull its forecasts.

Shares in The Character Group fell by as much as 10 per cent in London after it warned that its ability to estimate sales into the US market was “considerably obscured”.

• Read in full: Peppa Pig maker caught up in Trump’s tariff war

Jamieson Greer, Trump’s trade representative, said the United States had not initiated trade talks with China.

“Not at this point,” he told reporters in Washington on Friday.

Greer said the US needed to lessen its reliance on Chinese imports and source trade from other countries. He told Fox News it was “dangerous” if the US could only sustain its standard of living by relying on Chinese imports.

Greer said they would be using the 90-day pause on higher US tariffs to strike new trade deals with countries. He said he felt confident he would be able to deliver enough deals over the next few months for Trump to “feel comfortable” they were “pushing trade forward”.

A trade conflict based on blanket 25 per cent tariffs could cut economic growth in Germany by more than 1 percentage point, according to calculations from an economic institute.

That duty would reduce gross domestic product by 1.2 per cent one year after coming into effect, according to the study by the IAB Institute for Employment Research on Friday.

The number of employed people would be 90,000 lower and the number of people in the labour force would be 10,000 lower, the study showed, assuming flat tariff increases of 25 per cent.

“A structural crisis and now a trade crisis on top of that: this is a blow for industry,” Enzo Weber, the head of macroeconomics at IAB, said.

Its figures chime with the country’s leading forecasting institute, which said this week the tariffs could put Germany on track for a third year of recession for the first time in post-war history.

Ireland’s finance minister said members of the Eurozone will use the 90-day pause to engage in a “constructive way” with the US.

Paschal Donohoe said the pause was an opportunity to negotiate “an alternative path”.

Donohoe, who is chairing a meeting of the Eurogroup in Warsaw, said the EU will use the weeks ahead to find a better way of dealing with the issues.

President Xi will begin a three-nation tour of southeast Asia next week, aiming to forge closer ties with some of China’s closest neighbours as trade tensions escalate with the United States.

Xi will visit Vietnam from April 14 to 15, as well as Malaysia and Cambodia from April 15 to 18, the state-run Xinhua news agency said on Friday.

Cambodia (49 per cent), Vietnam (46 per cent) and Malaysia (24 per cent) will all be hit hard by US reciprocal tariffs if they are fully implemented.

The Chinese president this week pledged to deepen “all-round co-operation” with China’s neighbours.

Earlier today, Xi said China was “not afraid” of the US, but warned there will be “no winners” in a global trade war.

Germany has called for a diplomatic solution to an escalating trade war after China retaliated against massive US tariffs with its own 125 per cent duties on goods from America.

The dispute is not only affecting the United States and China but also “having an impact on a globalised world economy”, Steffen Hebestreit, a German government spokesman, said, adding that “a negotiated solution must be found that works well for all sides”.

The world’s economic and trade order has been seriously damaged by the tariffs imposed by the United States, said Li Qiang, the Chinese premier, on Friday, his first public comments since they were announced by Trump on April 9.

The tariffs have dealt a huge blow to the global economy, Li told Pedro Sánchez, the Spanish prime minister who is currently visiting China, according to Chinese state media.

Rachel Reeves said the government was committed to securing the “best deal possible” with the US without compromising trade relations with other countries.

Speaking at Downing Street, the chancellor said: “We continue to engage with our counterparts in the United States, and of course we want to secure the best deal possible for British jobs and British industry. And we are absolutely … resolved to do everything we can.

“But, at the same time, we also want to improve trading relations with other countries around the world.”

Reeves hosted the Indian finance minister in London this week as part of a push to secure a free trade treaty with India. The chancellor will also be travelling to Poland later on Friday to meet with other finance ministers across Europe.

The increasingly fraught tariffs war between the US and China hit London’s main market on Friday with the FTSE 100 opening down, but by midday the index of the UK’s leading companies had recovered slightly and was up 0.71 per cent to 7,969.06.

The more domestically-focused FTSE 250 was down 0.16 per cent to 18,487.9, despite the UK’s better-than-expected growth figures released this morning which saw the GDP rise by 0.5 per cent in February.

The pound rose against the dollar, up 1 per cent to $1.31, reflecting the sell-off in US assets as traders flee to safe-haven currencies as tension between the US and China ratchets upwards.

Other currencies, including the Swiss franc and the euro, were also up against the dollar. UK bond markets were still unsettled by the trauma of the past few days and UK government bonds, or gilts, which saw yields fall sharply on Thursday, saw yields rise again.

President Trump is well used to brushing off personal criticism and even seems to thrive on it

NATHAN HOWARD/REUTERS

Harry Truman, the 33rd US president, had a sign on his desk saying: “The buck stops here.”

Donald Trump, the 47th, has a Diet Coke button on his desk but no commander-in-chief can escape Truman’s logic: they are entrusted with enormous personal power, and in return are expected to take personal responsibility for decisions that can be life-and-death and cost trillions of dollars.

Just how badly has Trump’s authority been shaken by the chaos he unleashed with his tariff plan on “liberation day” last Wednesday?

• Read in full: How badly has Trump’s authority been shaken by his tariff plan?

President Macron said the partial suspension of US tariffs was a “signal and an open door to negotiation”, but urged his European counterparts to remain “strong” in the fight against the trade barriers.

The French leader warned the tariff pause remained “fragile” because a 25 per cent tariff on steel, aluminium and cars as well as the flat 10 per cent tariff on all other products still exist.

“They represent €52 billion for the European Union,” Macron said on X. “Fragile, because his 90-day pause means 90 days of uncertainty for all our businesses, on both sides of the Atlantic and beyond.

He said the EU remained committed to negotiating to remove the “unfair” tariffs and reach a balanced agreement. He urged the European Commission to remain strong in the fight against the tariffs.

“France is ready. Europe must be too. Let us remain clear-headed, united and firmly defend our interests,” he added.

David Sharrock in Madrid

Pedro Sánchez, the Spanish prime minister, has told President Xi that Spain “sees China as a partner of the EU”.

Speaking in Beijing, Sánchez, the first European leader to visit since Trump initiated his tariff hikes, said: “Spain is in favour of more balanced relations between the EU and China.”

He added: “As an active member of the EU with, I believe some political weight, we are emphasising the positives to build a positive agenda between Spain and China.”

Calling on Washington to negotiate with other world powers, he said that in troubled times it was necessary to seek closer ties with China.

“The more turbulent and changeable the international situation is, the more important it will be to continue the positive development of China-Spain relations.”

The Spanish leader said there remained differences of opinion between Madrid and Beijing, but said the solutions could be reached by negotiation.

Wang Yi, the Chinese foreign minister, has said that “the US cannot act recklessly, and the wheel of history cannot go backwards”, referring to American tariffs on China.

Wang made the remarks in a meeting with the International Atomic Energy Agency’s chief, Rafael Mariano Grossi, in Beijing.

On Friday China increased its tariffs on US imports to 125 per cent, hitting back against Trump’s decision to hike duties on Chinese goods to 145 per cent, raising the stakes in a trade war that threatens to upend global supply chains.

Germany’s export-driven economy will feel the impact of a “massive escalation” in the growing trade dispute between China and the United States, a government spokesperson in Berlin said on Friday.

“We are currently seeing a very massive escalation in trade issues between the United States and China,” the spokesperson said. “As a country with a high proportion of exports … we will of course not remain unaffected by this.”

Maros Sefcovic, the European trade commissioner, will travel to Washington on Sunday for talks, an EU spokesperson said on Friday, adding that Brussels was preparing for all outcomes, including the failure to reach a deal.

“The trade commissioner is going to Washington to try and sign deals. That is what we are focused on. All options are on the table should that not lead to a good outcome,” Olof Gill, the European Commission trade spokesperson, told Ireland’s RTE radio.

Stephen Kinnock, the care minister, said the UK government was still committed to striking a trade deal with the United States, but had to be prepared for the possibility that it might not happen.

Although US officials have poured cold water on the idea that countries will be able to obtain a special rate below the standard 10 per cent tariff, Kinnock said ministers were “very focused” on getting a deal.

“Things change all the time. So, I think it’s best for us to stay focused on the fact that we have that objective of getting a trade deal with the United States,” he told Sky News.

“But, of course, we also have to be prepared for the eventuality that we don’t get it immediately, or that it takes some time to come, and what that means is we’ve got to build a United Kingdom that stands strongly on its own two feet.”

Shigeru Ishiba, the Japanese prime minister, has set up a task force to oversee trade negotiations with the United States, headed by his close aide and economy minister, Ryosei Akazawa, who domestic media said will visit Washington next week.

Akazawa will meet Scott Bessent, the US Treasury secretary, and Jamieson Greer, the trade representative, for tariff talks on April 17, the public broadcaster, NHK, reported on Friday.

Akazawa told a news conference: “I understand Mr Bessent is very fond of Japan and undoubtedly has a good impression on our country. He also has a deep financial background, so could be a tough counterpart to negotiate with.”

“He seems to mention non-tariff barriers and currency policy as among topics he’d like to discuss,” he said, adding that Japan will not take any topic off the table.

President Trump has threatened additional tariffs and sanctions against Mexico over a decades-long water dispute claiming “Mexico has been stealing the water from Texas Farmers”.

Trump accused the US’s southern neighbour of failing to provide 1.3 million acre-feet of water from three rivers, the Rio Grande, the Colorado and the Tijuana, as set out in a 1944 treaty.

“Mexico is unfortunately violating their treaty obligation,” he wrote on his social media platform, Truth Social.

“This is very unfair, and it is hurting South Texas Farmers very badly. Last year, the only Sugar Mill in Texas CLOSED, because Mexico has been stealing the water from Texas Farmers. THAT ENDS NOW!”

The president added: “We will keep escalating consequences, including TARIFFS and, maybe even SANCTIONS, until Mexico honours the Treaty, and GIVES TEXAS THE WATER THEY ARE OWED!”

Sir Keir Starmer should call for a conference of world leaders to deal with the fallout from Trump’s tariffs in the same way he rallied world leaders to support Ukraine, the Liberal Democrats said.

“Donald Trump’s nonsensical economic policies have thrown the world economy into crisis and put thousands of British jobs at risk. Now is not the time for complacency,” Sir Ed Davey, the Lib Dem leader, said.

“The prime minister should show the White House that we have alternatives by hosting a summit of world leaders and building an economic coalition of the willing.”

Davey said the Starmer government should not “beg” for a trade deal with the US. “That is not the way to stand up for Britain or our national interest,” he said. “The best way to end this trade war for good is by standing tall with our allies, not cowering in the corner.”

The price of gold has risen to a new high fuelled by a weaker dollar as the escalating trade war between America and China sent investors rushing toward safe-haven assets.

The price rose to a record $3,219.84 on Friday in response to President Trump ratcheting up tariffs on China after sliding last week when Trump announced his aggressive new tariffs.

The dollar is down against its major peers. Gold is priced in dollars, so when the currency weakens, the price of gold usually rises. This makes it attractive during currency volatility or when confidence in government-issued currencies decline.

Apart from tariffs, the rally in gold has been fuelled by central bank buying, expectations of interest rate cuts by the Federal Reserve, and geopolitical instability in the Middle East and Europe.

• Read in full: Gold price hits high as trade war unsettles markets

A man works at a Christmas tree factory for export and domestic markets in Jinhua, China’s eastern Zhejiang province

ADEK BERRY/GETTY IMAGES

Beijing slammed President Trump’s tariffs as a “numbers game” that “will become a joke”.

A spokesperson for China’s commerce ministry said on Friday that the US “should bear full responsibility” for the global economic “turbulence” caused by Trump’s tariff regime.

Washington’s duties on Chinese products have “become a numbers game with no practical significance in economics”, the spokesperson said.

“It will only further expose the United States’… bullying and coercion. It will become a joke.”

Washington’s levies “[caused] the current world economy, global markets and multilateral trading systems to suffer serious shocks and severe turbulence”, the spokesperson said, adding: “The US should bear full responsibility for this.”

Beijing raised reciprocal levies on US imports to 125 per cent and said it would go no further.

Taiwan’s president will be included in the first batch of world leaders to hold trade negotiations with the United States, President Lai said.

Taiwan, which makes a lot of the world’s semi-conductors, was hit with a 32 per cent tariff as part of the United States’ reciprocal tariffs, before the 90-day pause was announced.

The Taiwanese president said they were ready for any negotiations with Trump. “We are in the first batch of negotiations and the government will be well prepared,” he said.

“Taiwan’s desire to strengthen economic and trade co-operation with the United States over the past years can be [fulfilled] by taking this opportunity.”

The price of the iPhone could more than double for consumers in America after Trump’s tariffs on Chinese imports to the country.

Apple makes more than 75 per cent of its iPhones in China, according to estimates from Counterpoint Research, which could raise the cost of manufacturing the smartphone by hundreds of dollars.

An analysis of the cost of the individual components by TechInsights and iFixit, when tariffs applied to China were 54 per cent, suggested that the cost of producing the iPhone 16 Pro would increase from $580 to almost $850. That could rise to more than $1,300 once trade tariffs of 145 per cent are factored in.

Apple did not respond to a request for comment on the impact of US tariffs on its manufacturing base or the cost of producing the iPhone.

China’s mission to the World Trade Organisation (WTO) said on Friday that it had filed an additional complaint to the trade body over Trump’s tariffs.

“On April 10, the United States issued the executive order, announcing a further increase of the so-called ‘reciprocal tariff’ on Chinese products. China filed a WTO complaint against the United States’ latest tariff measures,” the statement from China’s mission said, citing a ministry of commerce spokesperson.

President Xi said China was “not afraid” of the US, but warned there will be “no winners” in a global trade war.

In his first comments since the escalation in tariffs between the world’s two biggest economies, the Chinese leader said the US had backed itself into a corner.

“There are no winners in a trade war, and going against the world will only lead to self-isolation,” Xi said on Friday, according to CCTV, China’s state broadcaster.

“For over 70 years, China’s development has relied on self-reliance and hard work — never on handouts from others, and it is not afraid of any unjust suppression.”

The comments came just before China announced reciprocal 125 per cent tariffs on all US imports.

Tariffs could have a catastrophic impact, even worse than foreign aid cuts such as those proposed by the Trump administration, on developing countries, the director of the United Nations’ trade agency said Friday.

Global trade could shrink by as much as 7 per cent and the global GDP by 0.7 per cent, with developing countries the worst affected, the International Trade Centre told Reuters.

The FTSE 100 turned negative after China raised tariffs on all US goods from 84 per cent to 125 per cent from April 12. The index fell by ten points, or 0.1 per cent, to 7.904.85. Markets in Germany and France were also down on concerns about the escalation in trade tensions.

The dollar was weakened further against a basket of currencies, dropping by 1 per cent to 99.76. This has pushed gold to a new all-time high of $3.223 an ounce.

China has announced new tariffs of 125 per cent on US imports, up from 84 per cent. The new rate matches the tariffs imposed by the US.

China’s finance ministry indicated that it would ignore further tariffs from the US. “Given that there is no longer any possibility of market acceptance for US goods exported to China under the current tariff levels, if the US side subsequently continues to impose tariffs on Chinese goods exported to the US, the Chinese side will pay no attention to it,” the statement said.

The Conservatives said the Starmer government still had a “long way to go” on growing the UK economy.

Despite figures showing the economy growing 0.5 per cent in February, Mel Stride, the shadow chancellor, said Labour’s policies had been doing their best to throttle the economy even before new US tariffs hit.

“Since coming to office, Labour’s choices have killed growth stone dead and there is still a long way to go to recover,” he said.

“At the emergency budget, the forecasts for growth, inflation and borrowing all moved in the wrong direction because of Labour’s decisions.”

Stephen Kinnock, the care minister, said the latest GDP figures were “a good step in the right direction”.

“Obviously, the stability that this government … has brought is helping investors to make plans for the longer term,” he told Times Radio.

“There is still a long way to go.”

Britain’s economy has defied expectations and grew by 0.5 per cent in February. Amid fears about the impact of the new US tariffs on the UK economy, the Office for National Statistics (ONS) figures showed the services and manufacturing sectors were stronger than expected last month.

Economists were predicting no growth in February after a flat month in January.

“The economy grew strongly in February with widespread growth across both the services and manufacturing sectors,” Liz McKeown, the ONS director of economic statistics, said.

“Within services, computer programming, telecoms and car dealerships all had strong months, while in manufacturing, electronics and pharmaceuticals led the way and car manufacturing also picked up after its recent performance.

“Across the last three months as a whole, the economy also grew strongly with broad-based growth across service industries.”

• Read in full: UK economy rebounds with 0.5% growth in February

Major stock markets in Europe had opened slightly higher with Germany’s DAX and France’s CAC 40 rising by 0.6 per cent and 0.7 per cent respectively.

Ursula von der Leyen, the president of the European Commission, said that Brussels was looking at retaliatory tariffs in case it fails to secure a satisfactory deal with the United States. It could include a tax on big tech.

Rachel Reeves, the chancellor, said the positive economic growth in February was “an encouraging sign, but we are not complacent”, given the uncertainty after the US tariffs on imported goods.

“The world has changed and we have witnessed that change in recent weeks,” she said. “I know this is an anxious time for families who are worried about the cost of living and British businesses who are worried about what this change means for them.”

Reeves said the government remained “pragmatic and cool-headed as we seek to secure the best deal with the United States that is in our national interest”.

“At the same time, we will be relentless in our work to kickstart economic growth, provide security for working people and renewal for Britain.”

The dollar has weakened further as confidence in US assets has been shaken. The anxiety has sparked a rush into safe havens, with gold rising to a high above $3,200 an ounce and the Swiss franc at a decade high against the dollar.

The yield on the benchmark ten-year Treasury reached 4.44 per cent on Friday, up from 4.17 per cent on April 1 which was just before Trump detailed his tariffs. The rise in yield reflects investors’ risk concerns.

Banks and investors said Trump’s decision to impose duties on Chinese imports as high as 145 per cent and keep in place a 10 per cent universal tariff presented a serious risk for the American economy.

“Combined with the ongoing policy chaos on trade and domestic fiscal matters, along with the still-large losses in equity markets and hit to confidence, it remains difficult to see the US avoiding recession,” JP Morgan said in a note to clients.

Join us on Thursday, May 1 for an exclusive event reflecting on Donald Trump’s first 100 days in office.

Join leading journalists, political analysts, and commentators as we unpack the major themes shaping the Trump administration, including the recent tariffs that have stirred significant debate over their impact on domestic industries and international relations.

We will discuss the personalities which Trump has surrounded himself with and consider the direction these will take in the year ahead.

Confirmed speakers include Josh Glancy, the editor of The News Review and Matthew Syed, The Sunday Times columnist. More names to be announced.

The FTSE 100 has opened up nearly 1 per cent higher this morning.

After a rollercoaster week on international share markets following President Trump’s tariff announcement and then 90-day pause, investors are hoping for a return to stability.

The growth in the FTSE 100 follows gains of 3 per cent yesterday.