New tariffs ignite trade tensions: Global markets react
New tariffs on goods imported into the USA from other countries came into effect at midnight from Tuesday to Wednesday. Among them is a total 104% tariff on China, confirmed just a few hours earlier.
Donald Trump announced last Wednesday, during the so-called Liberation Day, "retaliatory tariffs" on the entire world: 10% on all imports and 25% on foreign cars. He then showed a list of countries and tariff rates they would be subject to. The general tariffs went into effect on April 5, while additional tariffs, for individual countries with which the USA has a trade deficit (57 countries), went into effect on April 9 at midnight.
Trump's tariffs. 57 countries covered by new tariffs
During a conference in front of the White House, the US President argued that these would be "nice tariffs," not as high as those imposed on the USA by other countries. He assessed that thanks to such customs policy, America would become wealthy again.
The initial list presented by Trump on April 2 included over 70 countries.
Gigantic tariffs on China
A 104% tariff has been imposed on China. White House spokeswoman Karoline Leavitt informed on Tuesday that Trump intends to carry out his threat from Monday, when he threatened to impose an additional 50% tariff on imports from China if Beijing does not withdraw from its announced 34% retaliatory tariffs on Friday, which are to come into effect on Thursday.
The tariffs - referred to by President Donald Trump as "reciprocal" - are theoretically intended to establish equal conditions in foreign trade, but in practice do not reflect the trade barriers used by other countries, nor the size of their trade surplus with the USA. As a result, countries that apply high tariffs, such as Brazil, received lower rates than those having low tariffs on US products, like the EU.
High rates were especially imposed on Asian countries, both America's allies such as Japan (24%), South Korea (25%) or Taiwan (32%), and countries that are sources of cheap production competing with those manufactured in China, such as India (26%), Vietnam (46%), Bangladesh (37%), Indonesia (32%), or Cambodia (49%).
New tariffs will not, however, affect Canada and Mexico, on which President Trump had already imposed a 25% tax (covering about half of imports). Excluded from these tariffs are also steel, aluminium, cars, and car parts, which are also subject to separate 25% tariffs, as well as copper, medicines, semiconductors, and timber (these are to be additionally taxed in the future), as well as energy carriers and minerals not available in the USA.
According to Yale Budget Lab calculations, if all new tariffs take effect as announced by President Trump, the new average US tariff rate will increase from 2.2% to over 22% and will be the highest in over a century, as well as significantly higher than tariffs in most countries in the world. As a result, the tariffs will be higher even than those introduced by the Smoot-Hawley Act in 1930 in response to the Great Depression. The tariffs at that time are considered by historians to be one of the reasons for the prolonged global crisis.
Stock market turbulence
Even before the tariffs came into effect, Trump's announcement caused one of the deepest drops in the history of Wall Street. Over the last four trading days, the Dow Jones index lost over 10% in value and recorded record fluctuations caused by uncertainty and conflicting signals from the Trump administration.
Analysts at JP Morgan predict a recession in the USA if the imposed tariffs remain in effect. However, most analysts predict that the rates will be reduced through negotiations with individual countries.
