FTSE 100 Expected to Drop Amid Escalating Global Tariff Tensions

The FTSE 100 is poised to open 0.7% lower at 8,312 points, reflecting a broad-based decline across multiple sectors. Investor caution intensified following an international trade policy update from a major G7 economy, signaling possible new tariffs on European steel, aluminum, and electric vehicle components by early Q2 2026. The announcement has triggered a sell-off in export-oriented stocks, particularly within the industrials and materials segments. The decline follows a 1.3% drop in the FTSE 100’s performance during the previous trading session, erasing gains made in December 2025. The market’s downward momentum is amplified by a 2.1% decline in the Euro Stoxx 50 and a 1.8% drop in the DAX, indicating broader European market stress. Sectors most affected include engineering firms such as Rolls-Royce Holdings PLC, which saw its share price fall 3.4%, and mining giant Anglo American PLC, down 2.6% on fears of higher export costs. Market analysts point to the potential for a 10% tariff on UK-origin industrial goods entering the U.S. and a 5% levy on electric vehicle imports to Europe as key downside risks. These measures could reduce the operating margins of multinationals with significant exposure to transatlantic and EU trade routes. The Bank of England’s Monetary Policy Committee is expected to assess the implications of these trade developments during its next policy meeting on February 11, 2026. The broader impact extends beyond equities. The pound sterling weakened to $1.2480 against the dollar, down 0.6% from Friday’s close, as traders priced in a higher risk of trade disruption. The 10-year UK government bond yield rose to 4.32%, reflecting increased risk premiums ahead of potential inflationary pressures from import cost increases.