Investors have ramped-up bets on Bank of England interest rate cuts amid growing fears the outbreak of a trade war will weigh heavily on economic growth.

Signs of resurgent inflationary pressures had stifled expectations for further cuts this year as investors bet the bank would keep base rate high in efforts to tame price growth.

Just a month ago, markets had expected just one or potentially two more cuts this year of 25 basis points each, which would have taken base rate from its current level of 4.5 per cent to 4.25 or 4 per cent by year-end.

But markets were pricing in almost four cuts by the end of 2025 on Wednesday after US President Donald Trump's 104 per cent tariffs on China took effect.

Interest rate futures pointed to about 95 basis points of reductions to the BoE's benchmark bank rate by December, compared with around 78 bps on Tuesday as financial markets braced for a hit to economic growth.

Three cuts of 25bps each this year would take base rate to 3.75 per cent, while four would take it to 3.5 per cent.

The European Union will later vote on whether to impose retaliatory 25% tariffs on US exports which would come into effect next month.

The 27-nation bloc will discuss whether to raise duties on US goods including agricultural produce, make-up, steel parts and plastics.

The goods are understood to have been chosen because they can be easily sourced from elsewhere.

It was reported the EU would refrain from adding tariffs to bourbon amid fears reprisals could hurt European made wines and spirits.

The vote could mark Europe’s first act of retaliation against Donald Trump’s tariffs. Most of the tariffs would apply from 15 May, unless blocked by a majority of member states.

Famed investor Steve Eisman has offered a glimmer of hope for President Trump's controversial tariff policy, insisting the United States could still come out on top.

Amid plunging markets and fears of a global recession, Eisman - whose own exploits during the 2008 market crash were chronicled in Hollywood blockbuster The Big Short - said Trump could get 'pretty much what he wants' out of the tariffs.

'The reason why cooler heads will prevail is that, again, in a trade war, everybody will suffer; the US will suffer the least. If reasonable heads prevail, Trump will get pretty much what he wants.'

Watch the video below and read the full story here

by Mike Sheen

Global stocks resumed losses on Wednesday as sweeping US trade tariffs came into effect and the market bloodbath extended to 'safe haven' assets.

Chinese imports now face combined US tariffs of 104 per cent, while retaliatory measures imposed by Beijing look set to further disrupt the $583billion worth of trade between the two economic powerhouses.

Markets had rallied on Tuesday on hopes the White House may be willing to negotiate its tariffs policies, but have been propelled into reverse as no concessions emerged.

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China has reiterated it will 'fight to the end' in the country's first response since Donald Trump imposed 104% tariffs in response to retaliatory measures taken by Beijing.

The tax on Chinese goods represents the highest tariff living memory.

Speaking at a daily news conference, China's foreign affairs spokesperson Lin Jian said the Chinese people's 'legitimate right to development must not be deprived' by Trump's tariffs.

He accused the US of adopting 'bullying practices' and urged the Trump administration to 'demonstrate an attitude of equality and mutual respect' going forward.

Reiterating China's previous stance, he said the country would be compelled to 'fight to the end' if Trump 'insists' on provoking a trade war.

Donald Trump insisted he knew what he was doing as his tariffs saw global stocks plunge amid fears of an all-out trade war with China.

Speaking at a National Republican congressional committee dinner, Trump said:

Companies are pouring back into our country. I know what the hell I’m doing. I know what I’m doing, and you know what I’m doing, too. That’s why you vote for me.

They ripped us off left and right. But now it's our turn to do the ripping. And I do think that the war with the world, which is not a war at all, because they're all coming here. Japan is coming here as we speak.

They're in a plane, flying lots of them, all tough negotiators, but things that people wouldn't have given us two years ago ... three years ago, five years ago, seven - they're giving us everything. They don't want tariffs on themselves.

On Wall Street yesterday, the S&P 500 dropped 1.6 per cent after wiping out an early gain of 4.1 per cent. That took it nearly 19 per cent below its record set in February.

The S&P 500 has shed nearly $6trillion since Mr Trump unveiled the tariffs last week, the deepest four-day loss since the benchmark's creation in the 1950s. The index is now nearing a bear market, defined as 20 per cent below its most recent high.

Chancellor Rachel Reeves insisted Britain is 'accelerating trade deals' with the rest of the world as Donald Trump's global tariffs continue to trigger economic shockwaves.

The Chancellor and Business Secretary will later meet India’s finance minister for talks aimed at negotiating a deal with the country as the Chancellor said she wanted to create “the best possible conditions” for British business in a “changing world”.

Prime Minister Sir Keir Starmer on Tuesday reiterated his call for a calm approach to the changed US trade policy as a sense of optimism returned to the financial markets after several days of heavy losses.

Britain faces the lowest 10% 'baseline' tariff rate and has resisted imposing immediate retaliatory action, unlike the European Union which is impacted by a 20% import tax.

Ministers still hope an economic agreement with Washington can be reached to soften the blow of the levy which strikes UK goods, along with a 25% import tax on cars and separate ones for steel and aluminium.

But the Government will also seek to strengthen trade ties with other countries, including by trying to rebuild ties with the European Union.

The Chancellor said:

In a changing world, this Government is accelerating trade deals with the rest of the world to back British business and provide the security working people deserve. We are going further, faster to create the best possible conditions for British business by working to reduce barriers to trade.

Asian stock markets tumbled earlier this morning as they opened lower and extended their losses throughout trading hours.

Japan's stock index fell more than 5 per cent at one stage with global markets having been wobbly for days as investors are flummoxed over what to make of the trade war.

• The Nikkei 255 ended the day down 2.7 per cent at 32,130
• the Hang Seng in Hong Kong lost 1.8 per cent to 19,769;
• South Korea's Kospi fell 1.9 per cent to 2,291.
• The Shanghai Composite index was trading roughly level at 3,141,
• While the S&P/ASX 200 in Australia declined 1.8 per cent to 7,375 and shares in New Zealand also fell.

This morning, European indexes have seen a slump with the UK's FTSE 100 dropping 2.34% while France's Cac 40 is down 2.4% and Germany’s Dax fell by 2.3%.

The FTSE 100 fell sharply on Wednesday morning after a new wave of Donald Trump’s tariffs came into force, including a 104% levy on Chinese goods.

The index, which tracks the UK’s top 100 listed companies, fell 2.34% in early trades, or by 186 points, to reach 7,724.29 shortly after opening, wiping out most of the gains made on Tuesday.

Elsewhere in Europe, France’s Cac 40 was down by 2.4% while Germany’s Dax index slumped by about 2.3%.

Here is our top story this morning as stock markets plunged in response to Donald Trump's tariffs which came into effect for around 60 countries.

The President's tariffs have shaken a global trading order that has persisted for decades, raised fears of recession and sent stock markets around the world reeling.

Read Mark Duell's story here:

Good morning and hello to MailOnline's live coverage as stock markets plunge once again in response to Donald Trump's tariffs.

Trump's tariffs have taken effect on around 60 countries including a 104 per cent levy on Chinese imports.

Countries have been braced for potential economic damage from the import taxes on goods entering the US from midnight Washington time - just after 5am in the UK.

Stick with us for the latest news, reaction and analysis throughout the day.