Keir Starmer to mount diplomatic blitz as Donald Trump's tariff war triggers meltdown

China fired the first salvo in the new global trade war by hitting back against Donald Trump's tariffs - as the UK stock market suffered its worst day of trading since the start of the pandemic.

In a major escalation, Beijing announced a 34% tax on imports of US goods in retaliation at the rate imposed by the US President in his "Liberation Day" tariff blitz. Responding to the move, Mr Trump posted on his Truth Social platform: “CHINA PLAYED IT WRONG, THEY PANICKED — THE ONE THING THEY CANNOT AFFORD TO DO!”

The EU and Canada are considering retaliatory tariffs as the reels from the economic chaos triggered by the US President's swingeing import taxes. London's FTSE100 index shed 419.75 points, or 4.95%, to close at 8,054.98. It marks the biggest single-day decline since March 2020, when the index lost more than 600 points in one day. Similar market turmoil was reflected around the world.

will mount a diplomatic blitz with calls to European and Commonwealth leaders over the weekend as the UK grapples with a "changing, shifting global economic landscape". A blanket 10% tariff on British goods sent to the US comes into effect on Saturday but the car industry has already been hit with a 25% import tax which began on Thursday.

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The UK exports around £60billion worth of goods to the US, including £8.8billion worth of medicines and pharmaceutical products, and £6.4billion of cars. Scotch whisky is the UK's biggest food and drink export to the US, with a value of around £1billion a year, while Britain also exports large quantities of salmon, chocolate and cheese.

Tariffs are expected to drive down the demand for British goods by making them more expensive for Americans to buy, and risk pushing up prices for consumers. There are fears could flood other countries with cheap goods to make up for the pain of US tariffs, putting pressure on British businesses to compete.

Downing Street said the UK was "disappointed" to be hit by a 10% tariff - contradicting Mr Trump's claim that the PM is "very happy" about it. A No10 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."

The spokesman added: "We'll be engaging with international leaders over the weekend... The need for engagement with international leaders is clear. It is a changing, shifting global economic landscape."

The UK has set a May 1 deadline for a consultation with businesses on whether to hit back against Mr Trump's tariffs. Behind the scenes, frantic talks are underway to secure a deal that reduces the impact on British businesses. It is understood to focus on , with speculation mounting that the UK government could reduce the headline rate of digital services tax (DST) - paid by massive tech firms - as a sweetener.

Foreign Secretary said has taken US economic policy back almost 100 years with a “return to protectionism” - in the strongest rebuke from the UK so far. Speaking at a meeting of Nato counterparts in Brussels, Mr Lammy said: "We are a nation that believes in open trade, and I regret the return to protectionism in the United States, something that we've not seen for nearly a century.”

He said the UK was consulting with businesses on whether to retaliate as British negotiators battle to strike a deal to lessen the impact. The Foreign Secretary went on: “We have been absolutely clear that all options are on the table as we ensure the national interests of the British people, who will be very concerned at this time about how this affects the bottom line for them and their economic welfare.

"We will put their national interest first, and it's in their national interests to be negotiating with the United States an economic agreement at this time, but keeping all options on the table."

Chancellor insisted the Government is "determined to get the best deal we can" with the US. "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," she said.

"Those conversations are ongoing at the moment, but we're determined to get the best deal we can for our country."

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