Chancellor Rachel Reeves has abruptly cancelled her appearance at a high-profile London Stock Exchange event intended to celebrate a resurgent City of London, as global financial markets were thrown into turmoil by fresh tariff threats from former US President Donald Trump.
Market Turmoil Follows Trump's Shock Announcement
The planned speech, in which Ms Reeves was expected to herald the "first signs of a new golden age for the City," was scrapped on Monday morning. This coincided with Prime Minister Sir Keir Starmer delivering an emergency address from Downing Street, responding to the escalating international crisis.
The trigger was a statement from Mr Trump, who threatened to impose a 10% tariff "on any and all goods" sent to the US from the UK starting February 1, 2026. He declared this would rise to 25% from June 1 unless a deal is reached for Washington to purchase Greenland from Denmark. The same measures were directed at several other NATO allies, including Denmark, France, and Germany.
European Indices Slide as Gold Soars
The immediate financial reaction was sharp and negative. By mid-morning on Monday, London's FTSE 100 index was down approximately 0.6%, with losses spread across financial and industrial stocks. The sell-off was more severe on the continent, where Germany's Dax fell about 1.5% and France's CAC 40 tumbled 1.6%.
In a classic flight to safety, investors rushed into gold, driving its price to a fresh all-time high. The precious metal reached around $4,680 (£3,491) per ounce during the morning's trading. The price of Brent crude oil also dipped, falling roughly 0.7% to $63.70 per barrel.
Diplomatic and Economic Fallout
In his emergency response, Sir Keir Starmer signalled that Britain would not retaliate with its own tariffs, advocating for "calm discussion between allies." He firmly stated, "The use of tariffs against allies is completely wrong."
Market analysts were quick to assess the potential damage. John Wyn-Evans, head of market analysis at Rathbones, noted that Trump's move was "consistent with his habit of using trade as leverage." He warned that while the former president has retreated from such positions in the past when economic costs mounted, further market volatility is likely in the interim.
Amisha Chohan, head of equity research at Quilter Cheviot, suggested the market impact might be a "slower burn" compared to previous episodes, as diplomacy takes centre stage. However, she cautioned that the tariffs could disrupt inflation forecasts and delay interest rate cuts, which would ultimately prove negative for financial markets.
The cancelled event at the London Stock Exchange was meant to mark the recent strong performance of the FTSE 100 and new rules designed to make it easier for companies to raise capital in the UK. Ms Reeves's withdrawal underscored how swiftly geopolitical risks can overshadow domestic economic narratives.
