Fresh Trump markets turmoil as Reeves heads to Washington
April 21, 2025
Donald Trump has thrown markets into fresh turmoil as finance ministers including Rachel Reeves prepare to fly to Washington for crisis talks.
Trillions of dollars were wiped off US stocks and the dollar plunged to a three-year low on Monday just weeks after
the President’s “liberation day” tariffs
triggered a global sell-off.
It comes as Ms Reeves is set to attend the spring meetings of the International Monetary Fund (IMF) and the World Bank in Washington.
The IMF meetings are the first since Mr Trump’s inauguration and will take place against the most fraught economic backdrop since the Covid pandemic.
The so-called lender of last resort is expected to cut its growth forecasts on Tuesday as countries grapple with the fallout from Mr Trump’s trade war.
While in Washington, the Chancellor will also hold talks
on a US-UK trade deal
, as she struggles to turn Britain’s economy around.
US stocks plunge after Easter
As markets in the US reopened after the Easter weekend, the S&P 500 index, which tracks America’s largest companies, plunged by 2.4pc, while the Nasdaq 100 fell 2.6pc. The Dow Jones Industrial index suffered a 2.5pc decline.
The US dollar, traditionally a safe haven for investors,
fell to a three-year low
against a basket of six major currencies after slumping 1.1pc, with the pound rising 0.8pc to $1.34.
Gold also surged above $3,400 to hit a fresh record high, as investors continued to pile in on safe haven assets amid the market turmoil.
The latest chaos in financial markets was sparked by Kevin Hassett, Mr Trump’s economic adviser, who said the president was looking at whether he had the authority to sack Jerome Powell, the chairman of the Federal Reserve, America’s central bank.
Writing on his Truth Social platform, Mr Trump renewed an assault on Mr Powell, who has been chairman since 2018, saying he needed to lower interest rates immediately or risk the economy stalling.
“With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates, now,” Mr Trump wrote.
The US president has become increasingly frustrated with Mr Powell because he believes the Fed chief has not been quick enough to lower borrowing costs.
However, experts have warned that undermining the central bank’s independence risks destabilising debt markets and could spark a funding crisis in the US.
Paul Ashworth at Capital Economics, said: “Firing Powell would just be the first step in dismantling the Fed’s independence. If Trump is set on lowering interest rates then he will have to fire the other six Fed board Members too, which would trigger a more severe market backlash.”
Chancellor urged to ink US trade deal
Global markets were thrown into disarray after Mr Trump announced sweeping tariffs earlier this month before introducing a 90-day pause on his more punitive levies for all countries but China.
The US President has sought to pressure nations, including the EU and UK, into restricting their trade with China in exchange for tariff exemptions.
However,
in an interview with the Telegraph on Friday
, Ms Reeves spoke in favour of strengthening ties with Beijing, adding that it would be “very foolish” for Britain to disengage with the country.
Economists have warned the trade war will shave 0.8pc off the economy over the next two years, dashing the Chancellor’s attempts to kickstart growth.
KPMG earlier this month said the US tariffs would leave Britain £21.6bn worse off by 2027, putting pressure on Ms Reeves to have to raise taxes and cut spending.
Politicians urged the Chancellor to use this week’s IMF meeting to strike a deal with the US.
Andrew Griffith, the shadow business and trade secretary, said: “The US is the world’s single largest economy so it is essential that the government gets a deal done to protect British businesses from tariffs.
“The Chancellor goes to Washington having already caused her own slow down in the UK economy so it is a trade deal - rather than topping up her air miles and social media - that must be her priority.”
09:00 PM BST
Signing off...
Thanks for joining us on the live blog on what has been an eventful Easter Monday.
Oil prices have slumped amid fears that an escalating trade war between China and the US could hit global demand for energy.
West Texas Intermediate futures dropped at their sharpest pace since April 10, falling 2.5pc on Monday to around $63 a barrel.
The decline is thought to have been driven by concerns that a growing tariff battle between the US and China could weigh on demand for energy.
However, it also came as Iran held talks with the US over its nuclear program, which could impact Iranian crude supplies.
08:33 PM BST
The next Fed chair?
As Trump takes aim at Powell, speculation is rife over who might be in the wings if the US president decides to act on his threats and oust the Fed chair.
Kevin Warsh is among the most likely candidates to take up the position, according to US media reports.
Previously at Morgan Stanley and a special assistant to George Bush, Warsh acted as an adviser to the US president’s transition team on economic policy after he won the election in November.
Warsh, who also was a governor at the Fed, has not been shy in his criticism over monetary policy decisions.
Speaking last month, he said “inflation is a choice, and the Fed has made a lot of bad choices over these last several years.”
He has also defended Trump’s tariff plans, saying: “The president inherited a fiscal and economic and regulatory mess, and it’s going to take a little digging out to be on a stronger platform for growth. Rome wasn’t built in a day, so this will take some time.”
08:17 PM BST
‘I think the Federal Reserve ought to be independent’
Trump’s criticism of Jerome Powell comes despite pressure on the US president to rein in his attacks.
Speaking over the weekend, John Kennedy, a Republican who is part of the Senate banking committee, urged Trump to allow the Fed to be independent.
He told NBC on Sunday: “I don’t think the president, any president, has the right to remove the Federal Reserve chairman. I think the Federal Reserve ought to be independent.”
It followed growing signs that the US president would intervene and could force Powell out, with Trump telling reporters on Thursday: “If I want him out, he’ll be out real fast, believe me.”
07:56 PM BST
‘Fear is taking over’ in US
Over in the US, analysts say the fear is “taking over” amid a stock market rout.
Adam Sarhan, chief executive at 50 Park Investments in New York, said: “The fact that we’re down so much today after a long weekend tells me, OK, investors went into the weekend, they looked at the situation, and they see more uncertainty, not less uncertainty.
“We’re seeing more weakness now in the dollar and gold is at all-time highs, so clearly investors are spooked and fear is taking over.”
Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, said concerns centre around if Powell is forced out, saying he is “a steady hand, he’s a known entity, he’s stability in a world of uncertainty”.
“He brings that calmness to the market, something people can rely on that hasn’t changed stability while all this chaos is going on.”
07:41 PM BST
US retailers to urge Trump to rethink tariffs
Major US retailers including Walmart and Target will head to the White House later to urge President Trump to rethink tariffs.
Bosses from the two retail giants as well as Home Depot and Lowe’s will hold a private meeting with the Mr Trump to discuss the 90-day pause in retaliatory tariffs, according to reports.
Large retail chains face significantly higher costs from tariffs because they imports many of their goods from Asia.
China is facing 145pc tariffs while other manufacturing hotspots like Vietnam had faced tariffs of up 45pc before Mr Trump paused the levies. All imports into the US face a 10pc levy.
07:15 PM BST
Who is Jerome Powell?
Federal Reserve chair Jerome Powell has become enemy number one for Donald Trump in recent weeks – but who is Mr Powell?
Often referred to as “Jay” Powell , the 72-year old is chair of the Fed’s board of governors having held the position for the past seven years.
Prior to his chairmanship, he sat on the board as a Governor between 2012 and 2018 and was made chair by President Trump.
His background is steeped in the high politics of Washington DC and hard-nosed financial dealmaking – making him a tough adversary for the president to dislodge.
He has former ties with the Republican party, having served as a junior Treasury secretary for President George Bush’s administration in the early 90s.
A lawyer and investment banker by training, he spent the best part of eight years as a partner at Carlyle Group, the hard-driving US private equity firm after leaving the Bush administration.
He later set up his own private equity firm, Severn Capital Partners.
06:54 PM BST
China growth to slow sharply, Goldman warns
China’s economic growth will slow sharply over the next few months because of Donald Trump’s tariff war, Goldman Sachs has warned.
The Asian superpower is expected to grow by only 0.8pc in the second quarter, versus growth of 4.9pc in the first quarter, with exports expected to be down sharply in April because of tariffs, according to the investment bank.
Mr Trump levied 145pc tariffs on Chinese imports in the US, prompting retaliatory tariffs of 125pc from Beijing.
Analysts at Goldman said the slowdown would be more severe in the second quarter because many Chinese exporters may have front-loaded exports in the first quarter to escape the US tariff hit.
06:37 PM BST
US faces ‘90pc chance’ of recession
The US faces a 90pc chance of sinking into a recession this year if Trump’s tariffs stay in place, a top economist has warned.
Torsten Sløk, chief economist at private equity firm Apollo Global Management, said the US was almost certain to face a so-called voluntary trade reset recession, which is described as a self-inflicted economic slowdown.
“If the current level of tariffs continues, a sharp slowdown in the US economy is coming,” he said.
The President’s administration was criticised for implementing tariffs “in a way that has not been effective”, despite inheriting an economy with “strong growth” and 4pc unemployment, he said.
He added that “implementing extremely high tariffs overnight hurts many businesses”, particularly small businesses that lack the capital to pay the tariffs when imported goods arrive to the US.
“Expect ships to sit offshore, orders to be cancelled, and well-run generational retailers to file for bankruptcy,” he said.
06:19 PM BST
US bond funds suffer $11bn of outflows
US bond funds suffered another bout of heaving selling last week with nearly $11bn (£8.2bn) pulled by investors, fresh figures show.
Fears over Donald Trump’s tariff policy prompted the fifth successive week of outflows from funds invested in US fixed income.
In total, investors pulled $10.7bn on a net basis for the week ending April 16, following a $15.6bn exodus from funds in the prior week, LSEG Lipper figures show.
US bonds have suffered as fears over Mr Trump’s economic policy force investors to rotate their investment into other areas such as European government debt.
05:59 PM BST
US stocks slide further amid Trump fears
US indices are sliding further into the red as traders face another brutal day on the market. The Nasdaq is now down 3.2pc to 15,764 points while the S&P 500 is off 2.6pc at 5,147 points.
05:52 PM BST
JD Vance meets Indian Prime Minister
JD Vance has met with Narenda Modi, India’s Prime Minister, as the US Vice-President begins his four-day visit to the country, writes
Pui-Guan Man
.
Mr Modi’s office said that “significant progress” has been made in “negotiations for a mutually beneficial” trade agreement between India and the US.
New Delhi is among the countries keen to broker a trade deal to avoid steep tariffs.
President Donald Trump has targeted India with a 26pc levy, which has been paused for 90 days.
Mr Vance is accompanied on the trip by his wife Usha, the second lady of the US, as well as their children.
05:13 PM BST
Tariffs to dominate IMF jamboree
Talks over trade deals and tariff-driven market turmoil will likely dominate the World Bank and International Monetary Fund’s (IMF’s) summit in Washington this week, writes
Pui-Guan Man
.
Finance ministers and policymakers are preparing to meet for the first spring meetings since Donald Trump became US president for the second time.
Delegates will include chancellor Rachel Reeves, who will be hoping to cut a trade deal with the US during her trip to Washington.
The IMF warned last week that Mr Trump’s trade war could trigger a global financial meltdown, underlining its potential to disrupt the financial system. It cautioned that geopolitical risk was at its highest level in many decades.
Kristalina Georgieva, the managing director of the IMF, had previously flagged that Mr Trump’s tariffs “clearly represent significant risk” to the global economy.
04:37 PM BST
“First step in dismantling the Fed’s independence”
Paul Ashworth, chief North America economist at Capital Economics, said if Trump fired Jerome Powell it could spell the end of the Federal Reserve.
“If President Donald Trump does fire Fed Chair Jerome Powell, we suspect that the initial market reaction might not be disastrous, as long as Trump quickly lines up a relatively-qualified replacement, like Kevin Hassett or Kevin Warsh.”
He adds:
“In all likelihood, however, firing Powell would just be the first step in dismantling the Fed’s independence. If Trump is set on lowering interest rates then he will have to fire the other six Fed Board Members too, which would trigger a more severe market backlash, with the dollar falling and rates at the long end of the yield curve rising.”
04:32 PM BST
Magnificent 7-heavy Nasdaq leads the fallers
The Nasdaq 100, the tech-heavy index exposed to the Magnificent 7 stocks, is now down nearly 3pc led lower by Tesla.
The closely watched index is trading 2.86pc lower than Thursday’s close at 15,822 points over fears about Donald Trump’s economic policies.
Tesla’s near-7pc fall is driving down the Nasdaq, with all of the other Magnificent 7 stocks also in the red.
Apple fell 3.25pc, Google-owner Alphabet was down 2.85pc and Meta fell 3.63pc.
04:24 PM BST
Bitcoin strengthens against the dollar
Bitcoin has made its biggest gains since Donald Trump unveiled sweeping tariffs in early April as the dollar fell,
Pui-Guan Man writes.
The world’s largest and best-known cryptocurrency rallied 4.5pc to more than $88,200 (£65,700) on Monday, as the US dollar dropped to a three-year low on the back of Donald Trump’s feud with Federal Reserve chair Jerome Powell.
The move is the largest move since Mr Trump unveiled his tariff package on April 2.
Ethereum, the second biggest cryptocurrency, also climbed to around $1,628.
03:55 PM BST
Tesla shares slump after Barclays cuts target price
Tesla shares slumped more than 6pc after Barclays warned that Elon Musk’s group will make fewer vehicles than expected.
The electric vehicle giant saw shares fall by up to 6.7pc to $224.29 on Monday after the bank’s analysts warned of lower production volumes.
Barclays said it now expects Tesla to produce 1.69m vehicles this year, down 5pc from a year ago.
It also warned of slower demand because of Mr Musk’s association with Donald Trump.
“While it’s unclear to what extent Tesla has suffered global brand damage from Elon Musk’s political activities, we believe there was at least some impact in (the first quarter),” it said.
Barclays cut its price target from $275 to $325.
03:06 PM BST
Trump brands Fed chair a “major loser”
Donald Trump has branded Fed chairman Jerome Powell “a major loser” as he ramped up his assault on the central bank chief.
The US President said on social media that Mr Powell, head of the Federal Reserve, had been too slow to cut interest rates, and urged him to undertake preemptive cuts.
“With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation,” he said on his platform Truth Social
“Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?”
02:50 PM BST
China threatens countries that ‘appease’ Trump in tariff war
Beijing has threatened to punish countries that “appease” Donald Trump in trade deals while hurting China’s interests.
China’s commerce ministry said it will firmly oppose any nation striking a deal at its expense, and “will take countermeasures in a resolute and reciprocal manner”.
The warning follows reports that the US president will pressure nations,
including the EU and UK,
into restricting their trade with China in exchange for tariff exemptions.
The US president paused the wave of tariffs he imposed on all countries on “liberation day” April 2, with the exception of China, singling out the world’s second largest economy.
02:49 PM BST
Dollar plummets after Trump steps up attacks
The dollar slumped to its lowest level in three years after Donald Trump’s economic adviser suggested that the US president is seeking to
oust the chairman of the Federal Reserve
.
Mr Trump’s stinging rebukes of Jerome Powell
caused the dollar to fall
1.1pc on Monday to a three-year low against a basket of six major currencies as investors worried over the independence of America’s central bank.
Every G10 currency gained against the dollar, with the pound rising 0.6pc to $1.33, while gold also rallied to a fresh record high, surging above $3,385 an ounce. Investors have been piling in to safe haven assets amid fears over the US president’s economic policy and ongoing uncertainty related to the trade war.
Meanwhile, the dollar tumbled to a 10-year low against the Swiss franc and the euro surged to $1.15 – its highest level since November 2021.
Mr Trump has repeatedly criticised Mr Powell, whom he appointed to chair the Fed in 2018, and
suggested he should be removed
for failing to lower interest rates more quickly.
02:39 PM BST
US markets slump
US stock markets slumped on Monday over fears Donald Trump could remove the chairman of the Federal Reserve.
The S&P 500 fell 1.2pc at the open to touch 5,217.83 while the Nasdaq declined 1.4pc led lower by the Magnificent 7 tech stocks to 16,015.31.
Tesla fell 5.1pc to while Nvidia fell 3pc.
US markets have been rocked by fears that the head of the Federal Reserve, Jerome Powell, could be remove from office by Mr Trump.
Markets in the US were closed on Friday for a public holiday, making Monday the first chance for investors to react to news the President was exploring the plans.
Tariff wars have already alarmed markets, with all major US indices losing $10 trillion in the weeks following Mr Trump’s “liberation day” tariffs.
