Trump says US economy 'will boom' after sweeping tariff announcement despite markets tumbling

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3 April 2025, 21:08 | Updated: 3 April 2025, 21:58

Donald Trump has insisted that the US economy will “boom” thanks to tariffs, despite Wall Street’s three main benchmarks all suffering heavy losses.

The president said his plans will bolster production in the US and support home-grown goods, but economists have said the short-term impact will be higher prices and slower growth across the economy.

Mr Trump told reporters that he thought the day was “going very well” after his bombshell tariff announcement, which included 10% on the UK – and much higher import taxes on others.

“The markets are going to boom… the country is going to boom,” the US president said.

He added that other counties “have taken advantage of us for many, many years.”

But the tariff plans have sent shockwaves through global markets.

The Dow Jones index dropped 3.89% – its biggest fall since 2020 – when Covid shocked the markets. The S&P 500 lost 4.85% and the Nasdaq Composite dropped 5.99%,

The tariff announcement also sparked political reaction from allies including the UK.

Speaking on Thursday, Keir Starmer warned against “jumping straight into a trade war” in response to Donald Trump’s trade tariffs but insisted “nothing is off the table” to protect Britain’s national interest.

Putting the White House on notice, Downing Street launched a four-week “request for input” from businesses on hitting the US with retaliatory tariffs.

Business Secretary Jonathan Reynolds told MPs: “To enable the UK to have every option open to us in future, I am today launching a request for input on the implications for British businesses of possible retaliatory action. This is a formal step necessary for us to keep all options on the table.

“We will seek the views of UK stakeholders over four weeks until 1 May 2025 on products that could potentially be included in any UK tariff response. This exercise will also give businesses the chance to have their say and influence the design of any possible UK action.”

Earlier the PM insisted the Government will respond with “cool and calm heads” after the President slapped a 10% tariff on all UK imports into the US.

The FTSE 100 stock dropped more than 1.4% at the open this morning after Trump’s tariff announcement. Asian and European markets also fell sharply on the back of the announcement.

Sir Keir Starmer told business chiefs in Downing Street: “Last night the President of the United States acted for his country, and that is his mandate.

“Today, I will act in Britain’s interests with mine.”

Sir Keir said as the Government moved “to the next stage of our plan”, the “decisions we take in coming days and weeks will be guided only by our national interest, in the interests of our economy, in the interests of businesses around this table, in the interests of putting money in the pockets of working people”.

“Nothing else will guide me, that is my focus,” he said.

“Clearly, there will be an economic impact from the decisions the US has taken, both here and globally.

“But I want to be crystal clear: we are prepared, indeed one of the great strengths of this nation is our ability to keep a cool head.”

Trump announced the US will impose 10% tariffs on the UK, leaving the UK better off than many countries but still hit with a “devastating” blow.

Mr Trump made the announcement as he gave a rundown of the trade barriers the US will put up on foreign countries on Wednesday evening outside the White House.

The UK’s tariffs will be less stringent than others, sitting at the baseline of what Mr Trump announced in the Rose Garden.

China will face blanket tariffs of 34%, the EU 20%, and other countries even more. Vietnam will have 46% tariffs, Thailand 72% and Cambodia 39%. Madagascar will face 95%.”

Mr Trump also imposed imports of 25% on all imports of foreign-made cars.

British officials have been working behind the scenes ahead of the announcement with the US in a bid to minimise the tariffs to be imposed on the UK.

A Downing Street source told LBC immediately after the announcement that the 10% figure vindicated the government’s approach.

“No tariffs are good but this is lower than others,” they said.

But Ed Davey, the Liberal Democrat leader, said that the government should work with the EU and the Commonwealth to impose retaliatory sanctions where possible and sign their own trade deals to circumvent the US.

“If the Government gives in to Trump’s threats, it will only encourage him to use the same bullying tactics again and again,” Davey said.

The Conservatives blamed Labour for the trade barriers and urged them to work hard to agree a deal with the US.

And Despite the government’s optimism, British manufacturers said the tariffs would be “devastating” for them.

Stephen Phipson, chief executive of industry group Make UK, said: “Not only will volumes of direct exports to the US decline but it will destroy decades of integrated supply chains connecting the UK with US through other trading partners such as the EU, Canada and Mexico who are also impacted by US tariffs.

“Even without a formal preferential trade agreement, the UK and US have for decades enjoyed a balanced trade relationship, with mutual collaboration and investment that has helped job creation, growth and shared endeavour on both sides of the Atlantic.

“It is highly disappointing that the strength of this relationship, at a time of where both countries need to boost shared growth, employment opportunities and innovation options, does not extend to enhancing free trade rather the reverse, the consequences of which will immediately harm the US consumer and economy too.”

A spokesman for the Scotch Whisky Association said: “The industry is disappointed that Scotch whisky could be impacted by these tariffs.

“We welcome the intensive efforts by the UK government to reach a deal with the US administration, and we continue to support this measured and pragmatic approach towards a mutually beneficial resolution.”

He claimed that the tariffs weren’t “fully reciprocal” but rather “about half” of what other countries were doing. “We could have done that, yes, but it would have been tough for a lot of countries,” he said.

Read more: Trump announces sweeping tariffs ‘on countries throughout the world’ as he claims US has been ‘looted and pillaged’

Read more: ‘Liberation Day’ explained: What are Trump’s tariffs and how will they impact the UK?

Mr Trump said that soon he would be getting calls from foreign leaders asking for tariffs to be dropped. He said his message was: “Terminate your own tariffs, drop your barriers, don’t manipulate your currencies.. and start buying tens of billions of dollars of American goods.”

The president said that companies building products in the US would not face tariffs.

Some products are not included in the tariffs, such as steel and aluminium articles and auto parts already subject to tariffs, copper, pharmaceuticals, semiconductors and lumber, bullion, and energy and other minerals not available in the US.

Explaining his rationale for imposing tariffs, Mr Trump claimed in his speech that the US had been “looted, pillaged, raped and plundered by nations near and far, both friend and foe alike”.

He added: “Our taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore,” he adds.

Mr Trump said: “For years, hard-working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense. But now it’s our turn to prosper.”

He said earlier in his speech that he will sign a executive order implementing “reciprocal tariffs on countries throughout the world”.

He described it as a “declaration of economic independence”.

Speaking from the White House garden, the President said: “In a few moments I will sign a historic executive order instituting reciprocal tariffs on countries throughout the world.

“Reciprocal. That means they do it to us and we do it to them. Very simple, can’t get any simpler than that.

“This is one of the most important days in my opinion in American history. It’s our declaration of economic independence.”

“This is Liberation Day. 2 April 2025 will forever be remembered as the day American industry was reborn, the day America’s destiny was reclaimed, and the day that we began to make America wealthy again.”

Economists have warned that tariffs will have a negative effect on the US economy, as well as the rest of the world.

But Mr Trump said that his measures would bring jobs “roaring back” to the US.

He also took aim at Joe Biden’s previous regime for its economic management of the country.

Mr Trump said: “I don’t blame these other countries at all. I blame former presidents and past leaders. They let it happen to an extent that nobody can even believe.”

He also criticised “exorbitant VAT taxes” during his speech, saying: “For decades, the United States slashed our trade barriers on other countries while those nations placed massive tariffs on our products and created outrageous non-monetary barriers to decimate our industries.

“And in many cases, the non-monetary barriers were worse than the monetary ones.

“They manipulated their currency, subsidised their exports, stole our intellectual property, imposed exorbitant VAT taxes to disadvantage our products, adopted unfair rules and technical standards and created filthy pollution havens.

“They were absolutely filthy, but they always came to us and they said we’re violating we should pay for it.”

The US dollar fell sharply against key currencies on Wednesday evening as Donald Trump delivered his tariffs announcement at the White House.

The dollar had dropped about 0.7% against the pound, at 0.768, shortly after the speech began.

The US currency was weakening further against the euro, falling about 1%, at 0.9162.

Traders have been reacting to developments from the US amid uncertainty over how global trade will be impacted by new tariffs, and how far affected countries will respond.

What is a tariff?

Simply put, tariffs are taxes placed on imported goods into a country.

When tariffs are placed on goods it is the importer who pays up – meaning when Donald Trump announces tariffs this evening, it will be US citizens who pay.

Tariffs are ultimately designed to protect domestic manufacturing, boost jobs and convince consumers to buy local products.

To make up for the costs caused by tariffs, businesses often put prices up and that extra cost usually falls to the consumer.

This means the cost of everyday items like food, technology and cars could increase in the United States following tonight’s announcements.

Outside of the US, these tariffs could damage global economies as foreign businesses’ products become more and more expensive for American consumers, causing sales to fall.