Asian and European stock markets tumbled this morning as Donald Trump signalled he wouldn’t back down from his tariffs. The FTSE 100 has fallen by around 4%, while the Hang Seng in Hong Kong has plunged 13%, its worst day since 1997. Keir Starmer will this afternoon announce policies designed to protect Britain’s car industry from the levies, including reduced fines on manufacturers for failing to meet green targets. Healthcare workers will carry out routine house visits in a new NHS scheme aimed at reducing the number of people signed off work sick. Health Secretary Wes Streeting says early versions of the programme, which will be rolled out in 25 areas across England, showed “really encouraging signs”. John Lithgow and Lesley Manville were among the big winners at last night’s Olivier Awards at the Royal Albert Hall. Lithgow took home best actor for his portrayal of Roald Dahl in Giant, which scooped three prizes including best new play, while Manville won best actress for her role as Jocasta in Oedipus.

The thinking behind Trump’s tariffs

There are two theories as to what, exactly, Donald Trump is trying to achieve with his tariffs, says Ross Douthat in The New York Times. The first, more obvious aim is to revitalise American manufacturing. The idea that this “reshoring” will revive all those blue-collar communities suffering from deindustrialisation is probably optimistic – automation has changed those industries too much already. But rebuilding America’s manufacturing base does make sense from a national security standpoint. If we’re going to be “locked into great power competition for decades to come”, we can’t rely on factories in China or anywhere else.

The administration’s second rationale is more complex. The worry is that globalisation – and the dominance of the dollar – has enabled America to undertake borrowing it can no longer afford. Under this argument, tariffs serve three main purposes. They generate extra revenue without having to raise tax rates or cut big government programmes like Medicare. They encourage investors to put money into the safety of US Treasury bills – demand that will push down the interest rates on future government debt. And they enable America to renegotiate with other countries on the terms of its existing debt: lower interest rates in exchange for lower tariffs, essentially. The chairman of Trump’s Council of Economic Advisers, Stephen Miran, laid all this out in a paper last year, entitled A User’s Guide to Restructuring the Global Trading System. But, crucially, Miran warned that these measures should be done slowly and carefully, because a sweeping tariff system risked frightening the horses. Trump, ever the gambler, has chosen a different path: “shock and awe”.