European markets slump as China hits back with retaliatory tariffs

European markets have slumped further after China hit back at US import taxes with retaliatory tariffs of its own.

The UK's FTSE 100 and Germany's Dax dropped about 4%, with some companies seeing double-digit falls in their share prices.

The declines add to large falls seen on Thursday as markets continued to react to the uncertainty triggered by the US tariffs.

Traders are concerned the tariffs will increase prices and weigh on growth in the US and abroad.

The sweeping new tariffs announced by US President Donald Trump triggered a slump in global stocks on Thursday, with US markets seeing their worst day since the impact of the Covid pandemic in 2020.

Trump told reporters he thought things were going “very well”, adding: “The markets are going to boom.”

But on Friday markets continued to slide, then dropped sharply after China imposed additional tariffs of 34% on all US goods from 10 April.

In London, shares in Barclays bank and NatWest were down more than 8%, mining firm Glencore fell more than 9% and aero-engine maker Rolls-Royce was down more than 9%.

Russ Mould, investment director at AJ Bell, said the “relentless selling” had continued despite investors “hoping the pain would go away”.

“There are so many moving parts that getting your head around the situation [as an investor] isn't easy,” he said.

Jane Sydenham, investment director at Rathbones, said banking stocks, firms with supply chains that were exposed to tariffs, and tech stocks had all been falling.

Investors had been buying into safe haven assets including gold and government bonds, she said.

China had been “under severe pressure” to respond to tariffs of 54% on most goods, she said, and its economy was big enough to be able to take such action. But countries with smaller economies were having to be more cautious, she added.