Chancellor Rachel Reeves has confirmed the Labour Government will not impose retaliatory tariffs on the US despite President Donald Trump's threats to annex Greenland from Denmark.
President Trump has asserted the White House will levy 10 per cent tariffs on eight European countries, including the UK, if they do not recognise his claims to take over the Danish territory.
These tariffs will come into effect from next month and will be raised to 25 per cent later this year if the Trump administration's demands are not met by European allies.
Despite this, the Chancellor said: "'Britain is not here to be buffeted around. We’ve got an economic plan and it’s the right one for our country. 'If other countries want to increase trade barriers, that is their choice.
The Chancellor has confirmed the UK will not slap the US with tariffs
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"But we are determined to bring trade barriers down, which is why this week I’m meeting with European, Gulf partners, Canadians to talk about how we can free up trade and make it easier for businesses to trade around the world."
The Ftse 100 is currently on its third consecutive day in the red, despite briefly being in the green once trading opened, as investors become increasingly spooked over geopolitical developments.
Gold's price has skyrocketed past $4,800 per ounce following the White House's decision to instigate a trade war with Western allies, signaling investors are looking for a safe haven for their cash.
Susannah Streeter, the chief investment strategist at Wealth Club, shared: "It’s not surprising that investors are unnerved and are increasingly seeking out safer havens for their money, less reliant on the trajectory of the US economy.
President Trump introduced sweeping tariffs on a huge amount of countries | Reuters"The pile-on into gold is continuing, as it again hits fresh records. For now, it seems the only way is up for the precious metal, as unease continues spread about the potential for fresh geopolitical turmoil and a wider trade war.
"Greenland’s Prime Minister has warned citizens to prepare for a potential invasion, although he described it as unlikely, it won’t help calm tensions.
"Economic repercussions are looking more likely. If Europe’s leaders open their shiny new economic toolbox and prepare to use their anti-coercive instrument, it could be deployed to curtail foreign investments or even tech firm’s access to the European market.
"That’s partly why the Nasdaq fell more sharply on Tuesday than the wider S&P 500. Even without the trade bazooka being launched, European investment institutions who are already unnerved by the growing US debt pile may be nudged into selling by the Greenland crisis.
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"Danish Pensions fund AkademikerPension is already moving in that direction, planning to exit its $100million holding of government debt by the end of the month."
Danni Hewson, AJ Bell's head of financial analysis, added: "This kind of uncertainty is unsettling and is having an immediate impact on sectors like French drinks makers, but last year’s bout of tariff turmoil was quickly forgotten and the year ended with a record-breaking run for many indices, including London’s FTSE 100.
"Notably, the UK’s flagship index is still keeping its head comfortably above the 10,000 mark despite current ructions and anticipation that tomorrow’s inflation data is likely to show prices have been heading back up again.
"But there is no certainty that the temperature can be turned down this time, and the continued surge in the price of gold suggests many are hoping for the best but looking to further pad out portfolios with safe haven assets."
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