UPDATE: |FTSE 100 hits one-year low as it drops 5% after Donald Trump tariffs News

It comes after new tariffs have been introduced by the President of the United States

The UK’s FTSE 100 has dropped by 5% after the markets reopened following Trump’s new tarrifs.

This takes the stock market index to a one-year low as fears deepen over the global impact of Donald Trump’s tariffs, despite Sir Keir Starmer promising new measures to support under-pressure manufacturers.

The index, which tracks the country’s top 100 listed firms, dropped by about 5% in early trading on Monday as a sharp sell-off kicked in shortly after markets opened.

Mr Trump, who spent the weekend in Florida playing golf, unveiled a range of tariffs on countries around the world last week, including a 10% “baseline” rate on all the US’s trading partners which came into effect on Saturday.

Analysts have warned that the scale of disruption in global financial markets is one of the worst to be felt in decades. A similar pattern occurred in Europe, with Germany’s Dax index recording a drop of about 6.5%, and France’s Cac 40 down around 5.3% in the morning.

Overnight, Asian stocks were also sinking to new lows after Mr Trump said he will not back down on his sweeping import taxes unless countries even out their trade with the US.

The US president said overnight on Monday that he did not want global markets to fall, but also that he was not concerned about the major sell-off, adding: “Sometimes you have to take medicine to fix something.”

The UK’s Prime Minister has promised to make a raft of reforms designed to provide “certainty” and “support for industry” as firms grapple with the impact of new rules from the White House.

Under new measures to be announced on Monday, rules around fines for manufacturers who do not sell enough electric cars will be relaxed, and supercar firms will be exempt.

While Sir Keir will reinstate the 2030 ban on the sale of new petrol and diesel cars, luxury carmakers like Aston Martin and McLaren will still be allowed to keep producing petrol cars beyond that deadline.

Since Mr Trump announced his financial plans on Wednesday, a 25% tariff is now applied to foreign cars imported into the US, while other products face a 10% levy.

Transport Secretary Heidi Alexander said the UK Government has had to look at its electric vehicle plans with “renewed urgency” because of the challenges facing manufacturers.

Jaguar Land Rover, one of the UK’s biggest carmakers, over the weekend announced that it would “pause” shipments to the US as it addresses the new trading rules.

Ms Alexander said the Government was not pretending its reforms to electric vehicle rules were a “silver bullet”, but that it was “part of a puzzle that we need to get right over the coming years”.