Donald Trump has claimed that China “played it wrong” after Beijing retaliated against new US tariffs, unveiling countermeasures that included additional duties of 34 per cent on all US goods.

“China played it wrong, they panicked – the one thing they cannot afford to do!” Mr Trump wrote in all caps in post on his social media platform.

Earlier, the US president wrote, also in all caps: “To the many investors coming into the United States and investing massive amounts of money, my policies will never change. This is a great time to get rich, richer than ever before!!!”

The three major markets in the United States have all opened with significant losses following what marked their biggest one-day drop since March 2020.

The S&P 500 was down 2.77 per cent shortly after opening, while the Nasdaq was 3.2 per cent lower than the previous close, and the Dow Jones down 2.58.

As global markets roil in the wake of Donald Trump’s global tariffs, investment bank JP Morgan has said it now sees a 60 per cent chance of the global economy entering recession by year end – up from 40 per cent previously.

In a note titled, “There will be blood,” chief economist Bruce Kasman said the so-called “Liberation Day” tariffs amount to the largest tax hike since 1968.

“The effect of this tax hike is likely to be magnified – through retaliation, a slide in US business sentiment, and supply chain disruptions. The shock is likely to be only modestly dampened by the flexibility tariff hikes afford for further fiscal policy easing,” Mr Kasman and his team write.

While it remains to be seen whether the tariffs could be implemented and potentially negotiated, the analysts say: “However, we view the full implementation of announced policies as a substantial macroeconomic shock not currently incorporated in our forecasts.

“We thus emphasise that these policies, if sustained, would likely push the US and possibly global economy into recession this year.”

It is now less than 10 minutes until the US markets open.

Futures for the S&P 500 fell 3.6 per cent before the bell, while futures for the Dow Jones Industrial Average shed 3.4 per cent, falling below the 40,000 mark. Nasdaq futures tumbled 4 per cent.

That follows Thursday’s losses for the three major US indices, which ranged between 4 per cent and 6 per cent, in what marked Wall Street’s worst day since the Covid pandemic five years ago.

Sir Keir Starmer will be holding a series of talks with global leaders this weekend as the world reels from President Trump’s tariffs and European markets plummeted.

Downing Street had made clear that the UK is “disappointed” with the US levies and will be speaking with partners in the coming days as it grapples with a “new era” in trade and a “shifting” economic landscape.

No 10 contradicted the US president’s claim on Thursday that the Prime Minister was “very happy” about the imposition of a 10% import tax on British goods entering America.

Asked on Friday whether that characterisation was accurate, a Downing Street 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 official 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.”

Lots of headlines are focused on global stock markets falling, plummeting, dropping or otherwise trending downwards in fast-moving fashion, writes Karl Matchett.

There are a few rather more specific terms that might be thrown around soon too.

A stock market “correction” is generally accepted as a 10 per cent drop from a recent high point, so if we take a recent high of the S&P 500 at 5842 in early March, it would need to drop to around the mid-5250s to be in correction territory. Yesterday it closed at 5396, so it’s drawing close to around that level.

A stock market “crash” is the more severe version – a 20 per cent or more drop in a day or short space of time.

It’s not time for that type of talk yet, though. The FTSE-100 is down about 6.8 per cent over the past month, so following a rise at the start of the year, it’s actually almost exactly flat now since the start of the year.

A snap poll of 562 members of the Institute of Directors found more than a third of bosses (37 per cent) expect to be hit.

Anna Leach, the IOD’s chief economist, said “a sizable chunk” of leaders wanted greater alignment with the EU.

She added: “At this point, most business leaders are adopting a “wait and see” approach to the tariffs.

“Others are looking to re-locate activity to the States or to trade more with other markets.

“With so much uncertainty surrounding the ultimate end point for tariffs as the UK progresses its own negotiations with the US, it is understandable that businesses will be reluctant to sink time and money into responses which are costly and difficult to reverse.

“But this will only add to the sluggishness in activity we have seen in the run-up to and since the October Budget announcements, and will further undermine growth.”

The Financial Times has warned that, if they endure, Donald Trump’s global tariffs “will go down as one of the greatest acts of self-harm in American economic history”, in a scathing editorial today.

The editorial states: “They will wreak untold damage on households, businesses and financial markets across the world, upending a global economic order that America benefited from and helped to create.

“This was no ‘liberation day’ for America. If Trump gets his way, the US economy will be isolated from the very system that has powered its century-long rise. The whole world will suffer, but it need not follow America’s path.”

And the Wall Street Journal’s editorial labels Mr Trump’s global tariffs an “abuse of power”, urging that “someone should sue to block” them.

It states: “Mr Trump’s tariffs are the biggest policy shock to the world trading system since Richard Nixon blew up Bretton Woods in 1971. As with that decision, Mr Trump is acting with little understanding about the damage his tariffs will cause. The ‘disturbance’ might not be as little as he imagines.”

Sterling has hit a seven-month low against the Euro while also falling against the dollar and the Yen, as China’s retaliatory tariffs against the US deepened a selloff in risky assets.

Among major developed market currencies (G10), sterling tends to be more volatile and sensitive to risk sentiment than traditional safe havens such as the Japanese yen, the Swiss franc, or the US dollar. However, Trump’s moves have raised questions about the safe-haven status of the greenback.

The pound fell 0.6 per cent to $1.3014. It dropped 1.6 per cent against the yen to a fresh five-week low at 187.92.

While looking to the possibility of a UK-US trade deal, investors boosted their bets on future Bank of England rate cuts and are now fully pricing in three 25 basis points in easing moves by year-end – in line with similar market expectations for the European Central Bank.

Sterling hit its lowest level since late August against the euro at 84.84 pence, down 0.6 per cent, although investors have recently sold the common currency on tariff-related headlines.

Chris Turner, head of forex strategy at ING, mentioned two drivers of the euro’s rise against sterling, saying: “The first is that the euro has better liquidity than sterling and will benefit more as investors leave the dollar.”

“The second is that the looming global trade war is proving the greater leveller for rate spreads,” he said, referring to past expectations of a slower pace of rate cuts in Britain.