US stocks on Wall Street posted their worst quarter in almost three years, new data shows. Investors fear that Donald Trump's tariffs will slow economic growth and push up prices.

The S&P 500 dropped 4.6% in the first three months of 2025, the worst performance since the third quarter of 2022, according to FactSet data. The US President is expected to announce a new set of tariffs on Wednesday, which Trump has dubbed "Liberation Day". Investors are nervously waiting to see the extent of the measures the White House is planning to unveil.

“I don’t think any of us expected the kind of continued headline noise, the lack of clarity on how the administration will go about achieving its goals,” Jesse Mark, global head of equity capital markets at US bank Jefferies, told the Financial Times.

He added: “It feels very much self-inflicted.”

UK Business Secretary Jonathan Reynolds believes the new tariffs will affect "every country in the world".

The Labour politician does not believe the UK will be spared from Trump's import charges, despite negotiations between London and Washington to try and reach an agreement.

He argued that tariffs were unnecessary, telling BBC Breakfast: "I think that our trading relationship is a very strong, and fair and balanced one, so I don’t think there is the need to do this."

However the Business Secretary is still hopeful a trade deal between the two countries can still be done.

Financial analysts are warning that Trump's new tariffs could backfire if set too high.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said: “Wednesday’s reciprocal tariffs could push the effective tariff rate another 4 percentage points higher.

"Anything further than that could move tariffs beyond a revenue-raising ‘sweet spot,’ in our view.

"Globally, the risk of high tariffs disrupting trade and economic activity would potentially offset any US federal revenue gains that the Trump administration seeks to use to further domestic policies.”

It comes as European stock markets staged a rally on Tuesday, with the FTSE 100 up 53 points and Dax rising by 1% at time of writing.