Time to wrap up…

Markets have been digesting news of Trump’s latest tariff threats, this time targeting eight European countries that are not supporting his controversial push to annex Greenland.

While the US stock market was shut for the public holiday, European stocks dipped, as investors bet that European companies could suffer if exports to the US were curbed as a result.

The FTSE 100 closed down 0.39% at 10,195.35 points, while the French Cac 40 ended the day down 1.78%, Germany’s Dax fell 1.33% and Spain’s IBEX dropped 0.26%.

But while US stocks were not trading, the US dollar index took a hit, falling 0.35% against a basket of global currencies. Brent crude prices, which started the day down 0.73%, stabilised to trade flat at $64.14 on Monday afternoon.

Safe haven assets benefited amid the jitters, with spot gold prices up 1.7% at $4,673 per ounce. That was not far behind fresh records set this morning, when it rose as much as $4,689.39 per ounce.

All eyes will turn state-side tomorrow, for US reaction to the American president’s latest geopolitical pressures.

We’ll be back then. Thanks for reading -KM

The FTSE 100 has closed down 0.39% at 10,195.35 points, while the French Cac 40 ended the day down 1.78%, Germany’s Dax fell 1.33% and Spain’s IBEX was down 0.26%.

But with US markets closed today, we’re not yet seeing the full fallout of Trump’s Greenland-retaliation tariff threats, with all eyes turning to Tuesday’s trading session.

AJ Bell’s head of financial analysis Danni Hewson says:

The fact US markets are closed for a public holiday means we’re only seeing half the picture today.

London’s blue-chip FTSE 100 was cushioned from the full impact of investor nerves over Donald Trump’s tariff threats, after shares in insurer Beazley hit a record high on news that Swiss rival Zurich had tabled an offer to snap up the company.

But fears that a hard-fought trade deal between Europe and the US might now be off the cards contributed to significant falls across European indices.

There’s a chance pent-up jitters are unleashed onto markets, though with news moving quickly, any potential deal could provide momentary calm. Only time will tell.

But Hewson still warns:

Uncertainty is the biggest dampener on sentiment, and the timing of the IMF’s latest forecast could be seen as ironic.

It may have been forecasting better global growth for 2026 following tariff negotiations and AI gains, but those negotiations might as well never have taken place if they can be ripped up so easily.

Twenty-four hours is a long time in this volatile world and tomorrow could bring another huge upset if the Supreme Court rules the president did not have the power to impose reciprocal tariffs in the first place.

Whilst that might be seen by many as a good outcome, it would also create massive instability with questions about how levies could be repaid and how Donald Trump’s administration may seek to overturn or get around the decision.

More concern from the drinks industry, with Aynard de Clermont-Tonnerre, managing director of the Assembly of European Wine Regions (AREV), voicing “deep concern” over Trump’s tariff plans.

They said the move would disrupt orders and and ultimately harm jobs, family farms and entire local economies.

Such a decision would have immediate and severe consequences for the European wine industry.

The United States is a key market for many wine-producing regions; any barrier to trade would directly undermine the economies of hundreds of rural areas, local employment, and the balance of industries already under pressure.

He added:

These threats create immediate instability, disrupting orders and undermining contracts. But above all, they strike at the heart of Europe’s wine-growing regions.

Behind every bottle exported, there are jobs, family farms, cooperatives, and entire local economies. When wine growing is destabilized, hundreds of regions are thrown into turmoil.

However, we must recognise that the issue has a broader geopolitical dimension and that it requires the European Union to be united and stronger than ever in its positions and in the defence of its economic sectors.

US importers are paying almost all of the costs associated with tariffs imposed by Donald Trump last year, according to a study published today by the Kiel Institut.

Its analysis of shipment-level data showed US importers bear 96% of the burden of tariffs introduced last year.

Julian Hinz, one of the authors of the study, found that “tariffs do not transfer wealth from foreigners to Americans.”

He said:

The tariffs are an own goal. The claim that foreign countries pay these tariffs is a myth. The data show the opposite: Americans are footing the bill.”

The research is based on more than 25 million shipment records, covering almost $4trn worth in US imports.

It found that when exporters are faced with tariffs, they could seek out alternative markets or even accept lower sales at the same margin. It added that many US importers have long-standing relationships with foreign suppliers and cannot easily switch to alternative sources.

Meanwhile US importers and wholesalers must pay tariffs at the border, which appears as a higher cost of goods in their books. Retailers who buy these products must then also face the same choice: absorb the higher cost or pass through. The study said evidence from the 2018–19 tariffs suggests most firms pass through cost increases to customers.

If Trump presses ahead with his latest tariff threat, it would cost UK businesses £15bn by June, the British Chambers of Commerce has estimated.

Shevaun Haviland, BCC director general, said:

We are still in the foothills when it comes to these new tariff proposals from the president and there is some way to go before we will have final clarity on them.

But should the worst-case scenario come to pass, then the impact would be significant. A £6bn hit at the end of January, rising to £15bn in June.

If that happens, orders will drop, prices will rise, and global economic demand will be weaker as a result. That would be a lose-lose situation for everyone.

The UK is not without influence, our bilateral trade with the US is worth £300bn, we have £500bn invested in its economy and it has £700bn tied up in ours. There is a high-level of co-dependency.

The government should keep everything on the table during talks. Many firms, especially [small and medium enterprises], will now be facing difficult decisions and we urge it to consider its contingency plans for support should the worst happen.

The existing 10% tariff means that many businesses have already negotiated with their US customers on managing the impact and we would suggest they continue this dialogue.

Last year, enhanced credit and financial support was offered through UK Export Finance and the British Business Bank to cushion the effect of tariffs, and this is another option.”

The BCC said it spoke with trade minister Chris Bryant this morning in a previously scheduled meeting. It said it expressed its support for the “level-headed” response from Keir Starmer to Trump’s latest tariff threat.

Stephen Davies, chief executive of Welsh whisky maker Penderyn, said further tariffs would put the health of the distillery’s US business at risk.

We export to about 20 states in the US. It’s business that we want to build and, as an export market, it’s very important to us.

In the US, there is already a three-tier system where the importer has to be separate to the distributor and the retailer.

You have three parties before you get on the shelf in a liquor shop and you’re giving margin to all of those parties.

If you add a tariff on top of that it compounds the whole thing. It’ll make products from the UK a lot more difficult to be competitive.

Some of the bigger UK brands might absorb some of that. When it’s 10% it’s painful but if it gets to 25%, I don’t think either us or the distributor can cope with that, it’s just not going to work.

People will disappear from the market and just hold fire until conditions get better. But you’ve been working for years building reputation and building product knowledge with consumers and you don’t want to stop doing that.”

Shares in the FTSE 100 insurer Beazley have shot up by more than 40% to an all-time high of £11.57 per share after the Swiss group Zurich Inusrance revealed it had made a £7.7bn takeover offer for the company.

Zurich said it made an offer of £12.80 per share, at a 56% premium to Beazley’s closing share price on 16 January 2026, the last business day before it submitted its offer to the business.

The company said it had previously tabled a bid of £12.30 per share, which Beazley rejected on the grounds that it undervalued the business.

Beazley, which is headquartered in London and employs about 2,500 people, is one of the biggest specialist insurers in the world. Its expertise ranges from cybersecurity to fine art.

Zurich’s chief executive Mario Greco told the Financial Times that the latest bid was the group’s fifth offer for Beazley since its first takeover approach about a year ago.

He told the paper:

It was time to go public and eventually have [Beazley’s] shareholders say what they think.

Beazley said it has “not yet had the chance to consider Zurich’s improved proposal of 1,280 pence per share, received on 19 January 2026.”

The company said in a statement:

We will update shareholders in due course. In the meantime, Beazley shareholders are urged to take no action.

Analysts at Goldman Sachs have made a more conservative estimate about the potential economic impact of Trump’s latest tariff threat.

Goldman thinks if Trump goes ahead with a further 10% tariff, it would lower real GDP by 0.1%-0.2% across the countries affected, including the UK.

Sven Jari Stehn, an economist at Goldman, wrote:

We estimate the largest hit for Germany worth about 0.2% if implemented as a 10% incremental reciprocal tariff (which seems most likely) and 0.3% if implemented as a blanket tariff.

For the euro area as a whole, the implied GDP drag is around 0.1%, similar to the UK.

The hit could be larger should there be adverse confidence or financial market effects. But the drag would be smaller if countries rerouted trade through EU countries not subjected to the additional tariff.

The GDP hit across countries would rise to a 0.25-0.5% hit for a 25% tariff. All of these GDP hits would come on top of the 0.4% real GDP drag we estimated from last year’s tariff increases.”

Analysts at Capital Economics thinks the potential further tariffs could lead to UK GDP shrinking by 0.3%-0.75%.

The UK would be at risk of recession if Donald Trump goes ahead with his latest tariff threats, a leading economist has warned.

Paul Dales, of the consultancy Capital Economics, said UK GDP would shrink by 0.3%-0.75%.

If the existing tariff of 10% with some exceptions has reduced UK GDP by around 0.3%, then a rise in tariffs to 20% could subtract another 0.3% and a subsequent rise to 35% could take off another 0.45%.

So in a worse-case scenario in which the tariffs threatened by Trump apply to all products, they could subtract up to 0.75% from UK GDP.

Our tariff impact model…suggest the worse-case scenario could reduce UK GDP by 0.6% in three years’ time.

The actual influence would probably be smaller as some exports destined for the US are sold to other countries instead.

As a result, it makes sense to think about a possible hit to UK GDP in a range of perhaps 0.30-0.75%. With the UK economy currently growing by 0.2-0.3% a quarter, if this hit came all at once it could trigger a recession.

But it’s likely to be spread over many quarters. In fact, some front-running of exports before the tariff deadlines could initially boost GDP growth.

Dr Ignacio Sánchez Recarte, from the European wine industry body Comité Européen des Entreprises Vins, said:

The announcement by President Trump, and the very real risk of escalating tensions between the EU and the US, is bad news for both European and American citizens, and particularly for the EU wine sector.

This comes at a time when wine companies are still dealing with the rollercoaster triggered by the so-called “Liberation Day” in 2025, and were hoping for more stability and predictability in transatlantic trade.

But, instead of moving toward stability, the situation appears to be going from bad to worse, as this decision once again pushes businesses into uncertainty in our most important export market.

The United States accounted for 29% of EU wine exports last year, so the impact is significant and disruptive.

Dialogue and cooperation must remain the foundation of EU–US relations, and we urge political leaders on both sides to return to these principles.

While Trump’s latest tariff threats have spooked European stock markets today, the president could be undermined by the US supreme court.

The court is set to rule on the legality of Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs. It could rule as soon as this week.

Last week Trump wrote in a lengthy post on social media that it would be “a complete mess” if the court were to strike down his trade tariffs.

But US treasury secretary Scott Bessent said on Sunday that the ruling would go Trump’s way, but suggested there would be chaos if not.

He told NBC yesterday:

I believe that it is very unlikely that the supreme court will overrule a president’s signature economic policy. They did not overrule Obamacare. I believe that the supreme court does not want to create chaos.”

Richard Rumbelow, a director at UK manufacturers body Make UK, said despite the potential significant commercial impact of Donald Trump’s tariffs the UK should not immediately look to strike back with retaliatory actions.

It is a time for “cool heads”, he told BBC Radio 4’s Today programme.

What is important is that we have effective trade diplomacy from the UK. I don’t think this is a time for immediate retaliatory action against the US.”

Rumbelow pointed to the success of negotiations in the automotive and pharmaceutical sectors, which saw the UK eventually win lower tariff rates than other countries.

However, he also pointed out that with Trump threatening that the 10% tariff is due to come into force on 1 February there will be companies that already have products enroute to the US that will not be able to rethink their export strategy.

For example, in April Jaguar Land Rover moved to pause production after Trump announced his “Liberation Day” tariffs to assess the impact on its car manufacturing business.

Rumbelow said:

The 1st of February is a matter of weeks away…It takes longer than that for a product to leave UK shores and reach US shores. If you have a product already in transit, or potentially in transit this week, going to the US it could be that those products will face tariffs as soon as they land on US soil.”

Sean McGuire, director of Europe and International at the Confederation of British Industry (CBI), also stressed the importance of the UK-US trade economy and the need to reach “an acceptable solution through dialogue”.

He said:

The UK business community stands in full solidarity with Denmark and the people of Greenland. Respecting territorial integrity and sovereignty are fundamental to uphold international law. They are essential pillars in providing stability and predictability for our companies and our economies.

“The UK-US economy is important in generating mutual benefits for companies and citizens on both sides of the Atlantic. Additional tariffs will benefit no one and could seriously undermine the relationship. We support the UK Government’s efforts to reach an acceptable solution through dialogue.”

Tina McKenzie, policy chair at the Federation of Small Businesses (FSB), said:

Small exporters are already facing instability and confusion, with the threat of further tariffs adding yet more pressure. Tariffs do not punish governments, they land on businesses and consumers, and they are the ones who will suffer the consequences if these go ahead.”

The head of the Trades Union Congress has said more tariffs by Donald Trump would seriously harm Britain’s manufacturing sector.

Paul Nowak, general secretary at the TUC, said:

Once again Trump’s arbitrary tariffs threaten to take a wrecking ball to key British manufacturing sectors and jobs.

Keir Starmer is right to say this Labour government will pull every lever to protect working people.

That’s why this government must continue to prioritise a closer trading relationship with the EU.

It’s common sense in an increasingly volatile and unpredictable global economy that we forge stronger ties with our closest neighbours and largest trading partner.”

European defence stocks are rising this morning, as geopolitical tensions around Greenland rise.

Germany’s Rheinmetall is up by about 3%, and the UK’s BAE Systems is up by about 2%. Shares in the Italian defence business Leonardo have risen 3%.

Kathleen Brooks at the broker XTB notes that BAE Systems, Babcock International, Rolls Royce, and Rheinmetall are the top performers in Europe and the US so far this year.

One way to assess the threat level to Europe from both Russian aggression and America’s threat to Nato is to look at the performance of these defence stocks. Rheinmetall is higher by more than a fifth so far in 2026, which suggests the risk is high. However, after rallying so hard, if President Trump does back down from Greenland, then defence stocks could be risk from a sell off, but that seems unlikely at this stage.

Prime Minister Keir Starmer has said a trade war is in “nobody’s interest” at a press conference this morning, as he appeared to play down retaliatory tariffs against the US.

He said:

We must find a pragmatic, sensible, sustained way through this, that avoids some of the consequences that will be very serious for our country.

You can follow the conference in full on our politics live blog here.

So far markets are still unhappy, with the FTSE 100 now down 0.5%. The Stoxx European 600 index is down 1.27%, with the main indices in Germany, France, Italy and Spain all down by more than 1%.

The pound is however holding up against the dollar, up 0.17% to around $1.34.

Dan Coatsworth, head of markets at the broker AJ Bell, warns investors will be watching closely as these losses could build over the near term.

A 1% to 1.5% decline every day over a series of weeks adds up to trouble, and that’s what investors are keen to avoid happening.

…The omnipresence of gold miners, defence contractors and utility providers on the FTSE 100 explains why the UK blue-chip index fared much better relative to other major European indices.

The International Monetary Fund has warned mounting geopolitical tensions and an escalation of Donald Trump’s tariff war could hit global economic growth and trigger a backlash in financial markets.

The Washington-based fund said a renewed eruption in trade tensions was among the biggest risks to global growth in 2026.

As world leaders prepare to gather in Davos, Switzerland, for the annual World Economic Forum meeting – widely seen as a critical moment to salvage international cooperation – the IMF said a breakdown in relations between the world’s most powerful nations would have damaging consequences.

It said renewed trade tensions could blow its forecasts off course by “prolonging uncertainty and weighing more heavily on activity”.

The eruption of geopolitical tensions could also result in “introducing new layers of uncertainty and disrupting the global economy through their impact on financial markets, supply chains, and commodity prices”.

Read the full story here:

European luxury stocks are also suffering this morning. The French conglomerate LVMH has dropped 4.45%, wiping billions off its market value. The group owns fashion brands such as Louis Vuitton, Marc Jacobs and Loewe.

Hermès International is also falling, down 2.9% this morning.

It seems markets are not counting on the ‘Taco’ trade this time, which investors now use for “Trump always chickens out”.

Mohit Kumar, of the broker Jefferies, thinks the deadline for tariffs could get delayed again. He says:

Markets have become used to Taco from Trump, with a number of randomly imposed tariffs scaled back after negotiations. Our base case is that the 1st February deadline will get postponed as diplomatic talks will start between the EU and the US.

However, we do not think that Trump will reverse his policy of these additional tariffs, as the matter of Greenland is not so easy to resolve. European position is clear that Greenland is not for sale and any military aggression will not be tolerated. Trump position also seems to be clear that he wants to acquire Greenland.

A potential diplomatic solution involving additional military camps and US presence in Greenland along with access to natural resources, but respecting the sovereignty of Greenland could be found, but that would take months of negotiations.”

He adds that Germany, Denmark and Sweden would be the most affected due to their reliance on the industrial, auto and pharmaceutical sectors.

EU’s countermeasures for the US would specifically target industrial goods including aircraft and autos, which should also bear the brunt of any drawn out trade wars.

In terms of market impact, the tariff measures create near term uncertainty but do not derail our medium term positive view. A short term correction was probably due anyway after the recent performance since start of the year.

Our thesis remains one of diversification away from the US AI theme, both across sectors and across geographies. In Europe, our view remains to follow the money. Defence is the key area where money will be spent over coming years and the recent tariff war has shown the need for Europe to become self-reliant. Financials will do well because all the money has to flow through the financial system. Mining and commodity related sectors should do well with the focus on defense and infrastructure. Autos and consumers remain our underweight.

The European Union is considering a plan to levy tariffs on €93bn of US goods, as European political leaders oppose his attempt to annex Greenland.

Yesterday the EU’s top diplomats met for crisis talks and considered reviving the plan, which was suspended after last summer’s trade deal with Trump.

The leaders of the UK, Denmark, Norway, Sweden, France, Germany, the Netherlands and Finland said in a joint statement:

Tariff threats undermine transatlantic relations and risk a dangerous downward spiral.

We are committed to upholding our sovereignty.”

George Saravelos, a strategist at Deutsche Bank, also notes that while Europe owns Greenland, it also owns a lot of US Treasuries.

For all its military and economic strength, the US has one key weakness: it relies on others to pay its bills via large external deficits.

Europe, on the other hand, is America’s largest lender: European countries own $8 trillion of US bonds and equities, almost twice as much as the rest of the world combined.

In an environment where the geoeconomic stability of the western alliance is being disrupted existentially, it is not clear why Europeans would be as willing to play this part.

Danish pension funds were one of the first to repatriate money and reduce their dollar exposure this time last year. With USD exposure still very elevated across Europe, developments over the last few days have potential to further encourage dollar rebalancing.

European car stocks are feeling the pain this morning, with many among the worst performers on the continent.

Shares in Mercedes-Benz Group are down 6%, while BMW is down 4.8%. Volkswagen has fallen 3.5%, and Stellantis, which owns brands such as Fiat and Chrysler, is down 2%.

Many carmakers are already under pressure from US tariffs, which are set at 15% for most vehicles and parts imported from the European Union.

The UK and Germany are the most exposed to higher tariffs from the US, according to Capital Economics, as they have the largest exports to the country.

Neil Shearing, group chief economist, says:

If the past year has shown anything, it is that the macroeconomic effects of tariffs are both uncertain and non-linear. Even so, the countries most exposed are those with the largest export shares to the US – notably the UK and Germany. A 10% tariff could reduce GDP in those economies by around 0.1%, while a 25% tariff could knock 0.2–0.3% off output. The impact on the other countries would probably be smaller. All else equal, such tariffs could add around 0.1-0.2%-pts to US inflation, although, as recent experience has shown, these effects can easily be offset by other factors.

However, he adds that the political ramifications would be far greater than the economic ones.

Any attempt by the US to seize Greenland by force or coerce Denmark into ceding the territory would drive a wedge through transatlantic relations and inflict potentially irreparable damage on NATO.

While European governments have shown a willingness to compromise with the US on issues such as trade, defence spending and Ukraine, sovereignty over Greenland is unlikely to be negotiable.

Denmark’s government has no authority to transfer the territory without the consent of Greenland’s population. That said, short of a transfer of sovereignty, Europe would probably be open to wide-ranging concessions – making it possible to envisage a ‘deal’ that Trump could present as a victory.

Kathleen Brooks, of the broker XTB, adds that the US tariff threat could push the UK economy into a recession.

If US tariffs are deemed legal by the US Supreme Court, then the UK could be in focus as the extra 10% tariffs could decimate the UK’s car industry.

Jaguar Land Rover is just getting back to full production after last year’s cyber-attack, so this blow comes at a bad time.

It is also a threat to UK growth. Manufacturing and production provided a major boost to November’s surprisingly robust GDP figure of 0.3%.

Cars are the UK’s biggest export to the US, so if Trump does not back down on his tariff threat, then the UK’s economy could be thrust back into recession territory. The pound was the second weakest performer in the G10 FX space last week, and it could sink further if Trump doubles down on his rhetoric at Davos.

There has been a slightly awkward diary change for Rachel Reeves this morning, as the chancellor has apparently withdrawn from her appearance at the London Stock Exchange this morning, while UK stocks are falling.

The chancellor was scheduled to appear at the LSE to hail a “new golden age” for the City, celebrating recent record highs in the FTSE 100 and new rules that the government says will make it easier for businesses to raise capital or IPO.

But Reuters is reporting that Reeves has cancelled this appearance and will now be at Keir Starmer’s press conference later this morning, where he is expected to outline the threat from potential US tariffs over Greenland.

The FTSE 100 has slipped by 0.3% this morning, but it is faring better than the European Stoxx 600 index, which is down by 1.06%.

Trump’s latest threat to revive his trade war with Europe comes as world leaders gather for the World Economic Forum in Davos this week.

The theme this year is a “spirit of dialogue” , with hundreds of leaders flying into the Swiss Alps to make the argument for free trade, geopolitical cooperation and the defence of Ukraine. They include the Nato chief, Mark Rutte and the European Commission president Ursula von der Leyen.

Trump is also expected to attend the summit this week, with the largest US delegation ever seen at the WEF, including the secretary of state, Marco Rubio, the treasury secretary, Scott Bessent, the commerce secretary, Howard Lutnick, and the special envoy Steve Witkoff.

While investors are bracing for some pain when the European markets open in about 10 minutes, remember that the US markets will be closed today to commemorate Martin Luther King Jr. Day.

But US futures for now are pointing to a 1% drop when the market opens on Tuesday.

It looks like it will be a rocky start to the week for investors after Donald Trump threatened eight European countries with new tariffs until they support his ambition to acquire Greenland.

The US president is planning to impose new trade levies of 10% on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland from 1 February, rising to 25% on 1 June.

Investors in Europe are spooked: futures for the continent’s European Stoxx 50 index are down 1.51%. Futures for the UK’s FTSE 100 blue chip index are down 0.48%, while the French Cac 40 is posed to fall 2.1% and the German Dax pointing to a 1.35% drop at the open.

In Asia, the picture has been more mixed as investors digested reports from China that its economy expanded at a 5% annual pace in 2025, though it slowed in the last quarter. In Japan, the Nikkei 225 slipped 0.7%.

Oil prices and the dollar are falling too. Brent crude is down 0.73% to $63.66 a barrel, while West Texas Intermediate is down 0.61% to $59.08 a barrel. The US Dollar index, which tracks the dollar against a basket of other major currencies, is down 0.23%.

And gold, which is seen as a “safe haven” asset during periods of instability, hit another fresh high this morning, rising to as much as $4,689.39 per ounce. It is now trading up around up 1.6% at $4,668. Spot silver is also up by about 3.8% to $93.39 per ounce, after hitting a record high of $94.08.

The US markets will be closed today to commemorate Martin Luther King Jr. Day. But US futures for now are pointing to a 1% drop when the market opens on Tuesday.

Jim Reid, of Deutsche Bank, notes while markets are spooked this morning, the shock could wane.

There will be hundreds of different opinions on how this will all pan out but remember that the tariffs announced on Liberation Day were ultimately softened a week later, on the day that long-end US Treasury yields saw a scary Asian session as international investors started to vote with their feet in terms of US funding. So financial markets may play a big part in how this situation resolves itself.

The main Achilles Heel of the US is the huge twin deficits. So while in many ways it feels like the US holds the economic cards, it doesn’t hold all the funding cards in a world that will be very disturbed by the weekend’s events. It also remains to be seen what political benefit there would be for President Trump domestically given that the mid-terms are widely believed to likely be about the cost of living.

In addition, a Reuters/Ipsos poll last week suggested that only 17% of US citizens supported efforts to acquire Greenland, with 47% against. Only 4% approved of using military force with only 8% of Republican voters agreeing.

That all being said, the tariff threats are still very real, he says.

Europe also needs the US in terms of helping with Ukraine. As such expect diplomacy to be going into overdrive over the next 12 days. There has been lots of talk over the weekend around the EU activating its anti-coercion instrument (ACI) which officially came into force at the end of 2023.

It has a high bar to be activated but this episode could well pass that threshold. Macron yesterday called on it to be used but he also wanted it used last year on China and talked of its use with the US after Liberation Day.

One of the problems is that it would likely take months to come to fruition as the formal and legal processes would need to follow due process. Given the extended timeline and potential difficulty in agreeing ACI use, last night EU ambassadors also explored the option of activating the EUR 93bn in retaliatory tariffs that were prepared in response to Trump’s tariffs last year but never implemented.

We’ll find out over the next few days how coordinated Europe is as it tries to respond, with an emergency summit of EU leaders being scheduled for this week, likely Thursday according to Politico.

Elsewhere this morning, chancellor Rachel Reeves is in London this morning, expected to hail a “new golden age” for the City.

This morning new regulatory rules come into effect for businesses considering an IPO or raising capital, reducing paperwork and costs following changes to UK Listing Rules.

She is expected to say:

Two years ago, some said the City’s best days were behind it. They were wrong.

We have taken a significant step forward today and I look forward to continuing to work closely with everyone here to ensure that our capital markets remain world-leading.

As the FTSE 100 reaches record highs and global firms once again choose London, we are seeing the first signs of a new golden age for the City.

London has thrived because it is open, dynamic and forward-looking. With simpler, faster prospectuses and a more competitive listings regime, we are reinvigorating that spirit – making the UK the best place in the world to start, scale and list a company, and ensuring the benefits of this new golden age for the City are felt in jobs and higher living standards in every part of our country.”