Bill Ackman, the billionaire hedge fund manager and Trump supporter, urged world leaders to do a deal “immediately”.

He said: “Trump is, at his core, a dealmaker who sees the world as a series of transactions. I expect Trump will reward the early dealmakers with fairer deals than those that wait to sit down at the negotiating table.

“Countries that respond with additional tariffs on our goods will be severely punished. The carrot and the stick writ large, big boy style.”

There are signs that some countries are beginning to fall into line. Javier Milei, Argentina’s far-Right president, said in a speech at Trump’s Mar-a-Lago resort in Florida last night that he was aiming to strike a zero-tariff deal with the US.

But the EU, which was hit with a 20pc levy, has branded the tariffs “illegal” and taken a more robust approach. Ursula von der Leyen, European Commission President, said Europeans “feel let down by our oldest ally” and that the bloc is “ready to respond”.

Politicians and business leaders have urged Sir Keir to resist retaliation and focus on a trade deal instead. Writing in The Telegraph, former Chancellor Jeremy Hunt urged the Prime Minister to copy the Singapore model and make Britain a low-tax nation that welcomed free trade and could thrive at a time of global instability.

Despite market chaos and warnings of a global recession, Mr Trump last night said his tariffs plan was “going very well”, adding: “The markets are going to boom.”