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Donald Trump has claimed that the European Union is “nastier” than China as he switched the focus of his global trade war.
Hours after the US agreed a 90-day pause on “tit-for-tat” tariffs with Beijing, the US president suggested the EU was not paying its fair share.
In particular, he suggested the bloc must pay more for drugs to help fund lower prices in America.
The US president told reporters: “The European Union is in many ways nastier than China, OK, we just started with them.
“We have all the cards. They treated us very unfairly. They sell us 13m cars. We sell them none. They sell us their agricultural products. We sell them for virtually none. They don’t take our products. That gives us all the cards. And it’s very unfair.
“So they’re going to have to pay more for health care, and we’re going to have to pay less.”
It came as Mr Trump pledged to slash US drug costs, as he announced a 30-day deadline for pharma giants to lower what they charge American patients.
A sweeping executive order calls on the US health department to broker new prices. If a deal is not reached, a new rule will kick in that will tie the price of what the US pays for medications to lower prices paid by other countries.
Critics of US drug prices say that Americans unfairly subsidise patients in other countries, whose health systems have negotiated lower prices.
Mr Trump criticised the EU in particular over the pressure placed on pharmaceutical firms to lower their prices and said that every country “should pay the same price”.
He said: “The European Union has been brutal, brutal. And the drug companies actually told me stories. It was just brutal how they forced them.”
Mr Trump said his order would reduce the cost of prescription drugs in the US “almost immediately” by between 50pc and 90pc.
He said: “Big Pharma will either abide by this principle voluntarily or we will use the power of the federal government to ensure that we are paying the same price as other countries.”
Read the latest updates below.
07:54 PM BST
Wall Street higher amid continued risks for company profits
Wall Street remains strongly up this evening despite worries that the trade war will continue to weigh down company profits.
Danni Hewson, head of financial analysis at AJ Bell, said: “Both the S&P 500 and the Nasdaq are significantly higher than they were before Trump brandished his reciprocal tariff charts on the White House lawn at the start of April.
“But there has been significant damage done to investor confidence and that’s evident when you compare both of those indices to where they were at the start of the year, despite today’s exuberance.
“It is hoped that after the 90 days current tariff levels will either be maintained or reduced further. But there are no guarantees, and continued uncertainty creates a quandary for many US companies.
“Should they rush to import more goods than they need over the next three months, just in case things go pear-shaped once again? They could find themselves out of pocket or it could be the best gamble they make all year.
“Whatever happens next, tariffs today are still significantly higher on goods coming into the US from China than they were before Liberation Day, and either businesses will have to absorb those costs at the expense of profit margins, the US consumer will bear the brunt, or we’ll see a combination of the two.”
The S&P 500 is up by 3.1pc, the Dow Jones is up by 2.7pc and the Nasdaq has risen 4.2pc.
Thanks for joining us on this live blog. That’s all for today but you can read all the latest on the trade war and the economy here.
07:24 PM BST
EU preparing for no-deal as its weighs up US-UK agreement
The EU is preparing for a no-deal outcome in its trade talks with the US, a European commissioner said today.
Valdis Dombrovskis said the European Commission was analysing the US-UK trade deal for its impact on the EU and global trade.
He said: “We are currently closely analysing the content ... to assess its ... potential implications particularly as regards any effects on EU interests or the global broader global trade environment.”
The EU itself is in negotiations with Washington on its own trade deal that would replace 20pc across the board tariffs on most EU goods and 25pc tariffs on steel and aluminium and cars and car parts.
The US has set a 90-day negotiating window ending on July 8 for a deal. Until then, tariffs on most EU goods are 10pc, except the higher 25pc rates on steel, aluminium and cars.
Mr Dombrovskis said: “Negotiations between EU and the US are ongoing and we aim to make use of this 90 day period ... with the aim of reaching a negotiated solution, which is our first preference as we have been indicating.”
06:57 PM BST
US tariffs to hit economy despite deal with China, says Fed official
Washington and Beijing’s agreement to temporarily reduce tit-for-tat tariffs marks an improvement for trade, but levels remain high and are likely to weigh on economic growth, a senior Federal Reserve official has said.
The comments by Fed governor Adriana Kugler came shortly after the United States and China said they would sharply lower tariffs on each other’s goods for 90 days while negotiations continued.
“Obviously that’s an improvement as far as trade between the two countries” is concerned, Ms Kugler said.
But she added that levels remain “pretty high”, noting that the world’s biggest economy imports many items from China.
With the latest agreement, the United States is set to lower its tariffs on Chinese goods from 145pc to 30pc, while China will reduce its retaliation from 125pc to 10pc.
“I still expect an increase in prices and a slowdown in the economy,” Ms Kugler warned, although she anticipates this will not happen to the same extent as before.
All eyes are on whether the 90-day pause will be sustained, she said, adding that things are moving in the right direction for now.
In her speech, she also said that “trade policies are evolving and are likely to continue shifting, even as recently as this morning”.
“Still, they appear likely to generate significant economic effects even if tariffs stay close to the currently announced levels,” she added.
06:29 PM BST
Trump tariffs encouraged UK rate-setter to want even lower rates
Alan Taylor, a member of the Bank of England’s Monetary Policy Committee, said the impact of Donald Trump’s “liberation day” tariffs were one reason for his vote to cut rates by half a percentage point last week, writes
Emma Taggart.
“The international dimension is quite perilous right now,” he said. He added that US tariffs had come “through bigger than expected in terms of triggering uncertainty”.
Mr Taylor, the newest extended member of the Monetary Policy Committee, dissented from fellow committee members after the Bank Rate was cut from 4.5pc to 4.25pc last Thursday.
He said that declines in the price of oil and gas alongside precautionary saving from households had added to his decision to vote for a half point cut.
“The erosion of confidence [in the economy] that we saw has continued. We’ve been getting very low readings,” Mr Taylor said.
06:15 PM BST
Both US and China were ‘economically boxed in’
The US and China struck a deal because they were both “economically boxed in”, a former US diplomat has said.
Craig Singleton, senior director at the Foundation for Defense of Democracies and a former diplomat, said the speed at which the agreement came about suggested that “both sides were more economically boxed in than they let on.”
He said: “For China, the economic pain was real: Rising unemployment, capital flight, and export orders falling at their fastest rate in nearly two years.
“For Trump, markets mattered, and this deal gives him a win without abandoning leverage.”
05:56 PM BST
FTSE strikes highest level for a month after US-China tariff deal
The FTSE 100 climbed to its highest level for a month as global financial markets rallied on the back of plans for the US and China to slash tariff rates for 90 days.
UK multinationals were broadly buoyed by the announcement, with mining and commodity firms particularly positive as a result.
However, pharmaceutical companies, such as AstraZeneca and GSK, lost ground after President Donald Trump pledged to bring down the price of drugs in the US.
London’s top index finished up by 0.6pc.
Stocks across continental Europe also continued to wipe out their losses from President Trump’s Liberation Day by making gains during the session.
France’s Cac 40 ended 1.4pc higher for the day and Germany’s Dax index was up 0.2pc.
Chris Beauchamp, chief market analyst at IG, said: “The weekend meeting between the US and China has yielded yet another 90 day pause, lighting a new fire under the market rally.
“The rebound from the April low was beginning to look a little tired, but today’s news has given it new life.
“The longer Wall Street continues to rebound, the harder it will be for investors to avoid putting money back to work in the US, even though worries remain that the data will start to deteriorate in the months to come.”
05:32 PM BST
Market is ‘acting like risk has gone away’, warns economist
Financial markets are acting as though the “risk has gone away” but businesses do not see it like that, an economist has warned.
Patrick Kaser, a portfolio manager at Brandywine Global, said recent breakthroughs such as the US and China tariff climbdown have buoyed investor sentiment.
He said: “The reduction in fears is a positive catalyst in the short term, but that doesn’t necessarily say much about the economy or the market a week from now or a month from now.
“There’s still uncertainty. It’s still hard for companies to make decisions on spending. The market is acting like the risk has gone away, but I don’t think that’s how a lot of businesses and companies are going to view the situation.”
Upbeat earnings reports, Donald Trump’s softening stance on tariffs and a US-UK trade agreement have helped both the S&P 500 and the tech-heavy Nasdaq erase all losses incurred following April 2, while the Dow Jones has recouped nearly all its declines.
05:19 PM BST
Traders cut bets on interest rate cuts
Traders have trimmed their predictions for lower interest rates in the UK, US and eurozone after talks between America and China allayed concerns about economic growth.
Remarks from a European Central Bank board member, Isabel Schnabel, also fuelled a reduction of bets on eurozone rate cuts.
Ms Schnabel said on Friday that the ECB should stop cutting borrowing costs as turmoil in the global economy is fuelling price pressures and inflation is at risk of exceeding the bank’s 2pc target in the medium term.
Traders are, nonetheless, fully pricing in two quarter point rate cuts in the US by the end of the year. They are almost fully pricing in two cuts in the UK (having more than priced it in on Friday) and are pricing in one cut in the eurozone.
05:14 PM BST
Colombia to cosy up to China as US relations sour
Colombia is preparing to sign up to China’s Belt and Road Initiative (BRI) amid souring relations with the US.
Gustavo Petro, the Colombian president, sparred publicly with Donald Trump earlier this year after the US president threatened Colombia with 25pc tariffs for not complying with deportation demands.
The US is currently Colombia’s largest trading partner, exporting oil, coffee and cut flowers, but the president has signalled a strengthening of ties with Beijing.
Speaking at the Great Wall of China during a state visit, Mr Petro said: “We have decided to take a profound step forward between China and Latin America.
“We’re going to sign the Silk Road.”
Wang Yi, China’s foreign minister, has confirmed China’s willingness to engage with Colombia through the BRI, Xi Jinping’s masterplan for spreading China’s influence.
05:02 PM BST
Wall Street’s fear index plummets to lowest since March
Wall Street’s “fear gauge”, the Vix, plummeted 12.2pc today, falling to a level not seen since since March. They spiked after Donald Trump announced his ‘liberation day’ tariffs on April 2, which spooked investors.
Kathleen Brooks, research director at XTB, said: “Stocks are surging, safe havens [such as gold] are rapidly declining, and expectations for Federal Reserve rate cuts have been dramatically scaled back.
“The market was not expecting the big change to US and China tariff rates, which is very positive for the outlook for the US and the global economy.”
Stephen Innes, of SPI Asset Management, has said that traders who bet on the US becoming a bear market have been hit by a “bear market bet massacre”, with their bets going up “in flames”.
04:47 PM BST
US will still outperform EU, says economist
The European Union’s economy will struggle to keep up with the US, despite the effects of Donald Trump’s policies, a leading economist has said.
Andrew Kenningham, chief Europe economist at Capital Economics, said: “There has been an increase in optimism about the EU in recent months as it has been forced to take more responsibility for its own security, has loosened fiscal policy and has benefited from having a far more stable policy environment than the US.
“However, while these are all positive developments, we think Europe will continue to be a less dynamic region than the US over the medium term. And with fiscal union still elusive, the euro-zone will remain vulnerable to country-level fiscal crises.”
He added: “Recent developments will do little to help the euro-zone overcome the structural constraints on growth including a declining working-age population, rigid labour markets, slow adoption of new technologies and a poor start-up environment.
“We expect eurozone growth to rise to around 1pc for the next couple of years, meaning the region would underperform the US by a smaller margin than in the past two years. But we then expect it to drop back, rather than accelerate as the consensus expects.”
04:30 PM BST
Dollar surges and gold drops as trade war thaws
Gold has slumped and the dollar is resurgent today after the US and China agreed to temporarily slash harsh tariffs and cooperate to avoid rupturing the global economy.
An index tracking the dollar against other major currencies rose further from hitting its lowest level in three years last month with a 1.2pc gain.
Spot gold prices, which hit an all-time high of $3,500 last month and often move inversely to the dollar, fell 2.8pc to $3,242.28 an ounce.
Gina Bolvin, president of Bolvin Wealth Management, said: “This is a textbook recovery after the market’s waterfall declines. The market is blowing through resistance levels and if it sticks, this is a big ‘win’ for Trump, for stocks and for investors.”
The euro, which surged in April as investors questioned the dollar’s long-held status as the world’s reserve currency, is 1.2pc lower at $1.1120.
Kit Juckes, chief foreign exchange strategist at Societe Generale, said the tariff pause was a “substantial relief” for the US and China.
04:11 PM BST
China wins ‘victory’ against Trump, says ING
The US-China trade talks have secured “a particular victory” for China, a leading bank has claimed.
Lynn Song, chief economist for China at ING, said: “These rates return tariffs to pre-Liberation Day levels and represent a better-than-expected de-escalation.
“Although the de-escalation of the trade war benefits both economies, the agreement, which significantly lowers tariffs without any concessions, is likely to be viewed as a particular victory for China.
“China had previously demanded a reduction in tariffs before negotiations, and this now seems to have been achieved.”
ING said it was expecting China’s export levels to “bounce back sharply” this month and next “as importers with depleted inventories will take advantage of the ceasefire to resume imports”.
03:58 PM BST
S&P 500 jumps to two-month high after US-China tariff truce
The S&P 500 hit its highest since early March this afternoon as a crucial US-China agreement to slash tariffs put investors worldwide at ease after weeks of uncertainty around the future of global trade.
The Dow Jones Industrial Average rose 2.6pc to an over one-month peak, while the Nasdaq Composite gained 3.6pc to its highest in more than two months. The S&P 500 advanced 2.8pc.
Most “megacap” shares jumped, with Nvidia rising 3.6pc and Tesla adding 6.6pc. An index of semiconductor stocks also leapt 5.9pc to an over two-month high.
Meanwhile, Apple shares rose 5.6pc after a report said the company was considering raising the prices of its autumn iPhone lineup.
Thomas Hayes, chairman at Great Hill Capital, said: “The market has to re-calibrate to what things look like before ‘Liberation Day’ and that looks like a very constructive growing economy”.
03:28 PM BST
EU ‘is in many ways nastier than China’, says Trump
European pharmaceuticals companies must prepare for pain as Donald Trump pledges to slash American drug prices.
The US president has pledged to cut drug prices by as much as 90pc as he takes aim at European Union trade with America.
Speaking ahead of signing an executive order to reduce the price of prescription drugs in the US, Mr Trump said: “The European Union is in many ways nastier than China, OK, we just started with them.
“We have all the cards. They treated us very unfairly. They sell us 13 million cars. We sell them none. They sell us their agricultural products. We sell them for virtually none. They don’t take our products. That gives us all the cards. And it’s very unfair.
“So they’re going to have to pay more for health care, and we’re going to have to pay less.”
Mr Trump said his executive order will reduce the cost of prescription drugs “almost immediately” by between 50pc and 90pc.
He said: “Big Pharma will either abide by this principle voluntarily or we will use the power of the federal government to ensure that we are paying the same price as other countries.”
03:24 PM BST
Trump aims to ‘cut out the middleman’ in drugs industry
President Trump said he would “cut out the middleman” in the drugs industry in an effort to bring down prices for consumers.
He said the middlemen were “smart businessmen” making millions of dollars without even making a product.
He said he would secure “most favoured nations drug pricing”, which would mean companies have to offer the US the same price as other nations if those other nations are offered a better price.
03:17 PM BST
Trump order drug companies to stop charging US consumers more
Donald Trump said the US will no longer subsidise the healthcare of other countries, which had paid “a small fraction” of the price paid by American consumers.
The US president said Americans spend 70pc more this year than they did in the year 2000 as he signed an executive order on the pharmaceutical industry.
He said the order would lower the prices by as much as 90pc for some consumers.
He urged drugs companies to stop price gauging.
03:11 PM BST
Trump: They’ve agreed to fully open China
Donald Trump said China will become “open” and will lift barriers to globalisation as part of a deal with the US.
Mr Trump said: “They’ve agreed to open China, fully open China. And I think it’s going to be fantastic for China.
“I think it’s going to be fantastic for us, and I think it’s going to be great for unification and peace.
“China will also suspend and remove all of its non monetary barriers. They’ve agreed to do that. Well, they’re very numerous.
“The biggest thing that came out of that meeting is they’ve agreed. Now we have to get a paper, but they have agreed to open up China for everybody.”
03:05 PM BST
China to ‘remove all’ non-monetary barriers to US, says Trump
Donald Trump said China had agreed to remove “all” non-monetary barriers to trade with the US.
Speaking at the White House, he said: “China will also suspend and remove all of its non-monetary barriers.
“They’ve agreed to do that.”
03:04 PM BST
Trump: Apple to build ‘lots of plants’ in US
Donald Trump said Apple would be “building a lot of plants” in the US following a conversation between the US president and the tech giant’s boss Tim Cook today.
Mr Trump did not give further details on the nature of the plans.
02:58 PM BST
Trump claims ‘total reset’ with China
Donald Trump said he had achieved a “total reset” in relations with China and said he would talk to Xi Jinping possibly by the end of the week.
The US president said he was not looking to “hurt” the world’s second largest economy with duties.
Speaking at the White House, he said his agreement with China does not include cars, steel and aluminium.
02:51 PM BST
Stocks climb since Trump urged Wall Street to ‘buy’
Wall Street’s stock markets have surged since Donald Trump told Americans it was a “great time to buy” in the wake of his “liberation day” tariffs.
Markets plunged around the world after the US president set out his so-called “reciprocal” tariffs against trading partners on April 2.
On April 9, he wrote on his Truth Social platform: “THIS IS A GREAT TIME TO BUY!!! DJT.”
Hours later, he paused the worst of his duties against trading partners, sending stock markets surging higher.
Since then, the Nasdaq Composite on Wall Street has climbed more than 21pc, while the S&P 500 has gained more than 16pc. The Dow Jones Industrial Average has risen more than 12pc.
02:32 PM BST
US stock markets rocket higher after US-China trade deal
Wall Street’s main stock indexes surged at the opening bell after the US and China agreed to suspend “reciprocal” tariffs for 90 days.
The benchmark S&P 500 jumped 2.9pc to 5,821.91 while the tech-heavy Nasdaq Composite rocketed by 4.1pc to 18,662.48.
The Dow Jones Industrial Average climbed 2.4pc to 42,275.42 after the world’s two largest economies agreed to pause the worst of the duties imposed against each other.
It effectively brings the tariff rate on Chinese imports to the American economy down from 145pc to 30pc, with China lowering duties from 125pc to 10pc.
02:24 PM BST
Borrowing costs surge as US-China deal agreed
The cost of government borrowing has surged around the world after the US and China agreed a suspension of the most-severe elements of their tariff war.
The yield on 10-year US Treasuries, a benchmark for the cost of servicing national debt, has climbed nearly nine basis points today to 4.47pc.
It leaves the cost of federal borrowing in the US higher than before Donald Trump unleashed his so-called “liberation day” tariffs on April 2, when the 10-year yield stood at 4.13pc.
US treasury secretary Scott Bessent has said the Trump administration is focused on bringing down the 10-year yield in an effort to bring down borrowing costs.
The 10-year UK gilt yield was up more than eight basis points to 4.65pc.
Investors turn away from the safety of the bond market when they think it is there is more chance that they can make money in riskier stock markets. Bond yields tend to rise when bonds are sold, pushing down their price.
02:08 PM BST
Trump pharmaceutical order to target ‘discriminatory’ policies
An executive order to be signed by President Donald Trump today will direct his government to take actions against “discriminatory” policies in foreign countries that suppress drug prices abroad, a White House official said.
The official said the Department of Health and Human Services will impose most favoured nation pricing with legislation if adequate progress is not made with the drug industry.
Favoured nation pricing is is a contractual provision where a seller promises a buyer that it will not offer another buyer better terms (including pricing) before offering those same terms or better to the original buyer.
01:47 PM BST
Bessent says ‘implausible’ for China tariffs to fall below 10pc
Scott Bessent said it was “implausible” that US tariffs on goods from China would drop below 10pc despite the world’s two largest economies agreeing a suspension of “reciprocal” tariffs against each other.
The treasury secretary said he would “see” what it is possible to achieve in trade talks during the 90-day pause announced today.
He said the new levels of tariffs were “obviously a floor”, adding that the “ceiling” would be the 34pc level against China announced on “liberation day” on April 2 but then raised to 125pc by Donald Trump.
“This is a pause down to 10pc,” he told Bloomberg TV.
“The April 2 level for China is 34pc. So we will be working to see where their final reciprocal number ends up. The negotiations are a combination of tariffs, non-tariff trade barriers, currency manipulation and subsidies of labour and capital.”
He added: “I’m not saying that they’re going to go up but it would be implausible that they would go below 10.”
01:25 PM BST
Trump tariffs ‘won’t touch China’
Donald Trump’s trade war “has been a waste of time” that will result in “pricier goods for Americans and more pain for US retailers”, according to Telegraph readers.
Here is a selection of views from the comments section below and you can join the debate here:
01:11 PM BST
Bessent to meet China again in ‘next few weeks’
US treasury secretary Scott Bessent said he expected to meet Chinese officials again in the coming weeks after Washington and Beijing agreed a 90-day pause of their “reciprocal” tariffs.
Mr Bessent said there had been a “sense of mutual respect” and of “shared interests” during the talks in Switzerland over the weekend, which had resulted in a meeting protocol loosely christened the “Geneva mechanism” .
He said the goal of future talks would be to address non-tariff barriers which were holding back American companies from doing business in China.
These would include unpicking laws and regulations built up over decades.
“Because China actually has low tariffs,” he told CNBC. “It’s these insidious non-tariff trade barriers that hurt American companies trying to do business there.
“Make no mistake, one of the goals here is to open China for American businesses in a fair way.”
He added: “I would imagine in the next few weeks we will be meeting again to get rolling on a more fulsome agreement.”
12:36 PM BST
EU tech chief to travel to US after call with Zuckerberg
The European Union’s tech commissioner will travel to the US following a phone conversation with Meta chief executive Mark Zuckerberg.
Henna Virkkunen will arrive in the United States on Tuesday, an EU spokesman said, amid rising tensions with Washington over fines handed out to tech giants.
Zuckerberg’s Meta has stoked a feud between Donald Trump and Brussels after warning an EU crackdown on its advertising business risks hurting sales this year.
The billionaire’s social media empire, which includes Facebook, Instagram and WhatsApp, warned that new EU restrictions on its advertising business would harm users in Europe and have a “significant impact” on revenues.
The warning, included in its first quarter results last month, is significant because it comes after Mr Trump’s administration accused Brussels of using its digital rules as a form of “economic extortion” on American companies.
The EU spokesman said Ms Virkkunen’s trip “is an important visit to the United States”.
12:25 PM BST
Tariffs ‘probably disinflationary’ for Britain, says Greene
A Bank of England policymaker said tariffs represent a global demand shock but “will probably be disinflationary for the UK economy”, writes Emma Taggart.
Megan Greene, a member of the Bank of England’s Monetary Policy Committee, said that trade uncertainty was causing businesses to delay decisions and “has a cooling effect on growth”.
She added that around 70pc of the UK’s exports to the US were in services but tariffs on goods would still have a lot of indirect effects on the British economy.
Ms Green said the net disinflationary impact of tariffs was one factor why she had voted for the Bank of England to cut rates to 4.25pc last week.
12:05 PM BST
Trump: Drug prices to be cut by 59pc
Shares in drugs companies remained lower after Donald Trump said drug prices would be cut by 59pc.
He wrote in a post on Truth Social today that costs for Americans were “down”.
He posted on Sunday that he would sign an executive order today to reduce the price of drugs and prescriptions in the US, sending shares in pharmaceutical companies falling.
12:02 PM BST
Traders push back bets on US rate cuts
Traders expect the Federal Reserve will not cut US interest rates until September after the Trump administration’s trade deal with China triggered a stock market rally.
Money markets indicate there is just a 45pc chance of a rate cut in July, compared to bets on Friday that there was a 69pc likelihood that the Fed would lower borrowing costs during that month.
Meanwhile, analysts are trying to offer some perspective on the deal agreed between the US and China, which has eased concerns about a shock to the global economy, pushing stock markets higher:
11:50 AM BST
We cannot rely on China in race for metals crucial for AI, says mining boss
China tariffs and export restrictions have opened up a “geopolitical fault line” for miners of metals key to the development of AI, according to US mining boss, who warned the trade war would triggered an overhaul of supply chains.
Jim Litinsky, chief executive of rare earths miner MP Materials, said: “Regardless of how trade negotiations evolve from here, the system as it existed is broken, and the rare-earth Humpty Dumpty, so to speak, is not getting put back together.”
China holds a near-monopoly in rare earths, which have been thrust into the limelight by the demands of AI.
China imposed restrictions on rare earth metals and magnets in response to Washington’s tariffs in early April, prompting the Trump administration to threaten reciprocal tariffs targeting critical minerals which have so far been exempt.
Mr Litinsky said: “For years, we have warned that the global rare-earths supply chain was built on a single point of failure.
“With China’s sweeping tariffs and export restrictions, that geopolitical fault line has now become a commercial reality.”
He added: “This idea that there was a threat that has now been utilised has really changed psychology, I think, from everybody across the board.
“My impression from conversations with the Department of Defence is that there is a full-on recognition that we can’t be reliant on Chinese magnetics for national security purposes.”
As part of efforts to divest from China, the US has signed a contentious rare earth minerals deal with Ukraine allowing the US to exploit the war-torn nation’s natural resources.
11:20 AM BST
UK and Switzerland ‘moved to front of the queue’ for trade deals
Scott Bessent said the UK was moved to the “front of the queue” for tariff negotiations because it came with a “very good” trade deal, Scott Bessent has said.
The US treasury secretary said Britain was America’s “oldest ally” and was also given preferential treatment as it also “does not have a currency manipulation problem”.
He also praised Switzerland for its investment in the US, adding he hopes to “bring some of its very robust trade training programmes to the US, as we re-engage the manufacturing sector because I believe the US has a lot to learn from Switzerland”.
However, he said the EU had been “much slower” on trade.
Mr Bessent said: “As our 18 important trading partners come to us, many with very good deals, as the UK, who skipped to the front of the line as our oldest ally, as ambassador Greer and I look at their proposals, to lower tariffs, to lower trade barriers, obviously the UK does not have a currency manipulation problem, and the subsidies for labour and industry, we look at these and I think ‘how did we get here?’”
He added: “The UK and Switzerland had moved to the front of the queue for the trade deals, whereas the EU has been much slower. So we value that also.”
10:57 AM BST
UK-US trade deal ‘incredibly welcome’ says Bank of England deputy governor
Clare Lombardelli said trade discussions with the US are “very positive” after warning that “higher tariffs and more uncertain US policies will likely reduce growth” in the UK, writes Emma Taggart.
Speaking at the Bank of England watchers’ conference, she added that any action taken to reduce the rate of tariffs is “incredibly welcome” but cautioned there was “still a long way to go to reduce these uncertainties”.
Lombardelli warned that “in the long term, if global trade were to fragment, this would reduce output and productivity and would raise inflationary pressures”.
Yet she said that tariffs were not the dominant driver for monetary policy in the UK as the country has a “very open economy”. It comes after the Bank of England’s Monetary Policy Committee reduced the Bank Rate from 4.5 pc to 4.25 pc last week.
10:42 AM BST
FTSE 100 ‘under pressure’ over Trump plan to cut drug prices
The FTSE 100 lagged behind its European and Asian peers in early trading after Donald Trump announced plans to reduce prescription drug prices.
The UK’s flagship stock index was up 0.4pc compared to gains of 1.5pc by the Cac 40 in Paris and 1pc on the Dax in Frankfurt.
Drugmaker AstraZeneca, one of Britain’s largest listed companies with a market valuation of £153bn, dragged down the performance of the FTSE 100 as it fell as much as 5.8pc.
Mr Trump announced in a late night post on Truth Social his intentions to sign an executive order to match prescription drug prices with the lowest available around the world in a move touted to drop US prices as much as 80pc.
AstraZeneca has seen £16bn erased from its market cap in the last week, while shares in Europe’s most valuable company, obesity drugmaker Novo Nordisk, fell 8.6pc and France’s Sanofi sank 6.4pc.
Sparking the sell-off, Mr Trump said prices “will rise throughout the World in order to equalise and, for the first time in many years, bring FAIRNESS TO AMERICA!”
Ipek Ozkardeskaya of Swissquote Bank said: “European markets are riding with joy...except for the FTSE 100...that is under pressure due to its exposure to pharmaceutical companies.
“These (European pharma) companies have been quite optimistic that they do have their protections in the US, so they won’t be hit by tariffs as bad as the other sectors. But now... there’s going to be a certain pressure on their revenues from the US sales.”
The FTSE was kept in the green by companies with exposure to China seeing some relief, such as banks Standard Chartered and HSBC which rose 7.5pc and 4pc respectively.
10:22 AM BST
Stocks boosted by ‘better-than-expected de-escalation’ of trade war
Stocks have surged after a “better-than-expected de-escalation” of the US-China trade war, according to analysts.
The Hang Seng in Hong Kong rose 3pc with Wall Street markets on track to make similar moves after US trade representative Jamieson Greer announced a 90-day pause on tariffs today.
Mr Greer said both countries had agreed to cut their rates by 115 percentage points.
Mr Trump had previously imposed a 145pc tariff rate on most Chinese exports, while China had reciprocated with a 125pc rate on US exports.
While more details are still to be released, the update signals a significant easing of trade pressure between the world’s two largest economies.
The agreement follows the UK Government unveiling its own trade deal as talks ramp up in a bid to limit the impact of Mr Trump’s “liberation day” policies announced last month.
Lynn Song, chief economist for China at ING, said: “These rates return tariffs to pre-liberation day levels and represent a better-than-expected de-escalation.
“Although the de-escalation of the trade war benefits both economies, the agreement, which significantly lowers tariffs without any concessions, is likely to be viewed as a particular victory for China.
“China had previously demanded a reduction in tariffs before negotiations, and this now seems to have been achieved.”
Nikos Tzabouras, analyst at Tradu.com, said: “Risk appetite has returned to markets after the United States and China agreed to substantially lower tariffs for 90 days, lifting Wall Street futures and weighing on traditional safe-haven assets.
“The breakthrough follows a separate US–UK agreement, fueling optimism that more trade deals may follow. This puts the S&P 500 back on track for new all-time highs, in a sharp reversal and exit from the claws of a bear market.”
10:01 AM BST
European pharmaceutical giants suffer £293bn hit from Trump drug plans
More than £293bn has been wiped off Europe’s biggest pharmaceutical companies after Donald Trump said he would sign an executive order to bring down drug prices.
Ozempic maker Novo Nordisk took a £116bn hit in early trading in Europe as its shares slumped as much as 8.6pc.
AstraZeneca lost its place as the largest company on the FTSE 100 as it dropped as much as 2.8pc after the US president said prescription drug and pharmaceutical prices would be reduced between 30pc to 80pc.
Its valuation dropped by more than £9bn to start the week, with rival GSK suffering a £2bn blow.
President Trump wrote on his Truth Social platform on Sunday that he would seek to use his executive order to bring “fairness to America”, which he said was paying five to 10 times more for some drugs.
He wrote: “I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World.
“Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before.”
09:39 AM BST
Stocks surge after US-China tariff deal
European stocks surged higher in early trading as optimism swept through the financial markets after China and the US struck a deal over tariffs.
The two countries are set to suspend most tariffs for 90 days after negotiations in Switzerland over the weekend.
In France and Germany, the Cac 40 and the Dax were up 0.7pc.
US markets are expected to open strongly in the afternoon in reaction to the de-escalation of trade tensions between the US and China.
The UK’s FTSE 100 jumped as much as 1pc shortly after markets opened but then retreated, settling about 0.1pc.
The index was dragged down by losses for pharmaceutical stocks following Donald Trump’s pledge to lower the price of some medication for US patients.
09:10 AM BST
Bessent to push for ‘balanced trade’ with China
Scott Bessent said he would push for “balanced trade” with China following talks over the weekend in Switzerland.
The US treasury secretary said both the US and China had “represented their national interest very well” during the negotiations.
He said: “We both have an interest in balanced trade, the US will continue moving towards that.”
He added that “neither side wants to decouple,” and said “we had a very robust and productive discussion on steps forward on fentanyl”.
He said that talks might lead to “purchasing agreements” by China.
US trade representative Jamieson Greer said the US wants to have more balanced trade with China and “our Chinese counterparts clearly came to deal this week”.
08:53 AM BST
Dollar surges as US-China to cut tariffs
The value of the dollar surged against major global currencies after the world’s two largest economies agreed to cut tariffs against each other by 115pc for 90 days.
The greenback was up 1.2pc against the euro, making the single currency worth $1.111 and putting it on track for its worst day of the year.
The pound slumped 0.9pc versus the dollar to $1.317 and the yen dropped 1.7pc to be worth around $0.007, or one dollar to every 147.7 yen.
08:43 AM BST
China stocks surge as tariffs cut
Chinese stocks rallied after the US and China said they have agreed to a deal to slash reciprocal tariffs in a substantial de-escalation of a potentially damaging trade war.
Speaking after talks with Chinese officials in Geneva over the weekend, US treasury secretary Scott Bessent told reporters the two sides had reached a deal for a 90-day pause on measures and that reciprocal tariffs would come down by 115pc.
Hong Kong’s benchmark Hang Seng Index extended the gains to over 3pc after the news, while the Hang Seng Tech Index rallied more than 5pc.
The yuan strengthened to 7.2001 against the dollar to reach a six-month high, while its offshore counterpart rose more than 0.5pc.
China’s blue-chip CSI 300 Index closed up 1.2pc and the Shanghai Composite Index added 0.8pc before the details came out.
William Xin, chairman of hedge fund Spring Mountain Pu Jiang Investment Management in Shanghai, said: “The result far exceeds market expectations. Previously, the hope was just that the two sides can sit down to talk, and the market had been very fragile.
“Now there’s more certainty. Both China stocks and the yuan will be in an upswing for a while.”
08:38 AM BST
We have a plan, insists Bessent
Treasury secretary Scott Bessent insisted the Trump administration has “a plan” after announcing both the US and China would cut tariffs against each other by 115pc.
“We have reached an agreement on a 90-day pause,” Mr Bessent told reporters after the sides issued the statement, adding that “both side will move their tariffs down” 115 percentage points.
The two countries will each lower the “reciprocal” element of the tariffs announced by Donald Trump on his so-called “liberation day” last month.
Mr Bessent added: “We’ve had a plan. We have a process in place. And now with the Chinese, we have a mechanism for continued talks.”
08:33 AM BST
Oil prices surge as US-China deal allays growth fears
Oil prices rocketed more than 3pc after China and the US agreed to suspend sweeping mutual tariffs and dial down the trade war between the economic superpowers.
Brent crude, the international benchmark, surged above $66 a barrel, while US-produced West Texas Intermediate jumped above $63.
The jump in prices comes as the lowering of tariffs raises hopes that the trade dispute will not deliver a heavy blow to global oil demand.
08:26 AM BST
Wall Street expected to surge at opening bell
US stock markets are poised to surge when the opening bell sounds in New York later after the US and China agreed to cut tariffs against each other by 115pc.
The Dow Jones Industrial Average was up 2.2pc in premarket trading, while the S&P 500 surged by 2.8pc.
The tech-heavy Nasdaq 100 surged 3.6pc.
08:24 AM BST
US and China both lower ‘reciprocal’ tariffs
At a press conference in Geneva, US trade representative Jamieson Greer said that both Washington and Beijing had agreed to lower the “reciprocal” element of tariffs against each other.
He said both sides had agreed to cut tariffs on imports from each other to 10pc, lowering the 125pc tariffs announced on China following Donald Trump’s “liberation day”, with Beijing responding with their own 125pc tariffs.
He added that the Trump administration’s 20pc tariffs related to fentanyl remained in place, meaning the US effectively has a 30pc tariff against China.
As a result, the US faces just 10pc tariffs on its exports to China.
08:15 AM BST
US to cut China tariffs to 30pc
The US and China have agreed to cut tariffs on each other by 115pc after two days of talks on trade.
Stock markets surged after US treasury secretary Scott Bessent said neither Washington or Beijing wanted to see a “decoupling” of relations.
It means the US will lower its 145pc tariffs on China to 30pc, while China will lower its 125pc tariffs on American imports to 10pc.
08:04 AM BST
FTSE 100 surges amid hopes for US-China deal
The FTSE 100 surged higher at the start of trading after the US said it was close to announcing a trade deal with China.
The UK’s blue-chip stock index opened 1pc higher at 8,638.05, while the domestically-focused FTSE 250 rose 0.8pc to 20,676.06.
08:02 AM BST
Gold slumps after US declares ‘substantial progress’ in trade talks with China
The price of gold slumped after the US and China raised hopes that the trade war between the world’s two largest economies could be defused.
Bullion, considered a safe haven assets by investors during times of turmoil, tumbled as much as 2.3pc to $3,259 an ounce after US treasury secretary Scott Bessent said there had been “substantial progress” in talks in Geneva.
Gold has surged by about 25pc this year amid fears Donald Trump’s trade policies would hammer global economic growth.
Kathleen Brooks, research director at XTB, said the US-China talks had left markets in an “optimistic mood”.
She warned: “The markets are desperate for clarification about US and Chinese trade relations. The risk is that the press conference does not deliver the level of detail that the market craves.”
07:50 AM BST
Investors sell bonds amid hopes for US-China trade deal
Investors are selling bonds amid hopes of a US-China trade deal.
Eurozone bonds yields have risen after Scott Bessent hailed “substantial progress” during talks in Geneva, Switzerland.
It meant Germany’s government borrowing costs hit a fresh one-month high as its 10-year bond yield rose 5.5 basis points (bps) to 2.61pc. Yields move higher as the price of a bond falls.
Investors tend to move out of the safety of bond markets when hopes for economic growth pick up. Yields are rising across the eurozone’s major markets.
07:40 AM BST
Heathrow enjoys record April despite tariff turmoil
Heathrow Airport said last month was its busiest April on record, as it served nearly 7.1 million passengers despite Donald Trump’s trade war raising concerns .
The figure was up 5.9pc compared with April 2024 and was partially driven by the timing of Easter this year.
Passengers jetted off despite the US president triggering global economy turmoil with his “liberation day” tariffs announced on April 2.
Heathrow said this year it has recorded the “highest departure punctuality out of the major European hubs”, 99pc of bags travelled on the planned flights, and 97pc of passengers waited less than five minutes at security.
Chief executive Thomas Woldbye said: “Last month showed Heathrow at its very best - we successfully navigated our busiest April ever whilst our service levels took a further leap forward.
“We’re providing great value for our passengers and I’m proud of what we’ve achieved in collaboration with our Team Heathrow partners so far this year.
“We’re now firmly focused on the busy summer ahead and work is under way across the airport to ensure we continue delivering for our customers.”
07:18 AM BST
FTSE expected to rise over US-China trade deal hopes
UK shares were poised to open higher after the US said it had agreed a trade deal with China.
The FTSE 100 rose 0.4pc in premarket trading while the Dax in Germany and Cac 40 in France were on track to rise more than 1pc.
Michael Brown, an analyst at Pepperstone, said: “What we seem to have here, then, is a broad framework under which the two nations can conduct further talks, with the aim of reaching a broader trade agreement.”
He added: “Not the worst case outcome that was possible from this weekend’s talks, far from it, but not a concrete deal either.
“Does this progress allow for any tariffs to be paused, reduced, or rolled back, and if so, for how long?”
07:17 AM BST
Stocks rise after US declares China trade deal
Stocks rose in Asia overnight after the White House said its negotiators had reached a trade deal with China.
The Hang Seng in Hong Kong was up 1.2pc and the CSI 300 in Shanghai rose 0.8pc after two days of negotiations in Geneva between teams from Washington and Beijing.
Wall Street stocks were also on track to open more than 1pc higher after US treasury secretary Scott Bessent said there had been “substantial progress” in the talks.
However, markets across Asia more widely were less affected as details of what had been agreed were not due to be released until later today.
Oil prices edged higher and the dollar also made gains against major currencies.
07:08 AM BST
Good morning
Thanks for joining me. Stocks rose after the US said it had agreed a trade deal with China.
Hong Kong and Shanghai indexes made gains after US treasury secretary Scott Bessent said there had been “substantial progress” after two days of talks in Geneva.
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What happened overnight
Asian shares advanced after two days of trade talks between China and the US yielded “substantial progress” according to treasury secretary Scott Bessent.
Officials said a joint statement would be issued later Monday following the trade talks in Geneva over the weekend.
Investors are also watching for developments in other flashpoints including clashes between India and Pakistan, the war in Ukraine and conflict in the Middle East.
India’s Sensex jumped about 2.5pc after it and Pakistan agreed to a truce after talks to defuse their most serious military confrontation in decades. The two armies have exchanged gunfire, artillery strikes, missiles and drones that killed dozens of people.
In Hong Kong, the Hang Seng was up 1.3pc to 23,172.87, while the Shanghai Composite Index picked up 0.6pc to 3,362.77.
Chinese EV battery maker CATL, or Contemporary Amperex Technology Co, said it plans to raise nearly $4bn (£3bn) in a share listing on the Hong Kong Stock Exchange.
Elsewhere in Asia, Japan’s Nikkei 225 added 0.4pc to 37,659.05, while the Kospi in Seoul gained 0.6pc to 2,593.55.
Australia’s S&P/ASX 200 climbed 0.1pc to 8,237.80 and Taiwan’s Taiex gained 1pc to 21,129.54.