Sir Tony Blair has urged Sir Keir Starmer not to retaliate against Donald Trump’s tariffs, saying such a move wouldn’t be in the UK’s “best interests”.

It comes as officials scramble to respond to the news that British exports to the US would face a blanket 10 per cent levy, sending global markets tumbling and sparking fears the chancellor’s fiscal headroom could be wiped out.

In a rare intervention, the former prime minister told students at King’s College London that he supported Sir Keir’s “cool heads” approach to Trump’s “Liberation Day”, and he didn’t really understand the intellectual argument behind the tariff policy.

“I don’t think it is in the UK’s best interest to retaliate,” he said, but admitted he did not know where developments over the tariffs would end.

Jane Dalton and Millie Cooke have more details in this exclusive report:

US Secretary of State Marco Rubio has defended Mr Trump’s tariffs, saying he was confident the markets would bounce back.

“Businesses around the world, including in trade and global trade, they just need to know what the rules are,” he said from a Nato meeting in Brussels. “Once they know what the rules are, they will adjust to those rules.”

“I don’t think it’s fair to say economies are crashing. Markets are crashing because markets are based on the stock value of companies who today are embedded in modes of production that are bad for the United States.”

Donald Trump has signed an executive order to shut down a trade loophole known as “de minimis” that has allowed low-value packages from China and Hong Kong to enter the US free of duties.

The move appears to be a massive blow to fast-fashion companies such as China-based Shein and Temu, which managed to rapidly expand in the US through the almost century-old de minimis rule. This tariff exemption will end on 2 May, the White House said on Wednesday.

Analysts say the bull market — which occurs when prices are rising and investor optimism is high — is now “dead.”

“The bull market is dead, and it was destroyed by ideologues and self-inflicted wounds,” Emily Bowersock Hill, CEO of Bowersock Capital Partners, told CNBC.

“While the market may be close to the bottom in the short-term, we are concerned about the impact of a global trade war on long-term economic growth.”

Donald Trump’s sweeping tariff campaign presents a “significant risk” to the global economic outlook “at a time of sluggish growth”, the head of the International Monetary Fund has warned.

Managing director Kristalina Georgieva said officials were still assessing the macroeconomic implications of the tariff plans Mr Trump announced this week.

“It is important to avoid steps that could further harm the world economy,” she said as global markets bled yesterday.

“We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty,” she added.

Vietnam has reportedly asked the US to postpone the hefty 46 per cent tariff imposed by Donald Trump, which will be implemented on 9 April.

The government, which was slapped with one of the highest tariffs, claims “there is still room for discussion and negotiation” between the two sides.

The tariffs will have a “negative impact” on Vietnam’s exports, the government said on its website.

“We believe that the decision is not in line with the reality of mutually beneficial economic and trade cooperation between the two countries,” Vietnam’s foreign ministry spokesperson Pham Thu Hang told Reuters today.

The US is Vietnam’s largest export market, and in 2021, exports to the US were valued at $142bn, nearly 30 per cent of the country’s GDP. Vietnam’s trade surplus with the US exceeded $123bn last year.