Trump's sweeping tariffs ignite global trade tensions and market jitter
President Donald Trump plans to announce the details of implementing new tariffs on products imported into the United States today. The regulations will take effect immediately following the announcement, which could potentially lead to the onset of a global trade war. Stock markets are already reacting to these announcements.
The administration refers to today as the "day of liberation. " On this day, the administration will present a detailed plan for imposing tariffs, which are expected to reach their highest level since 1946. According to the administration, the new regulations aim to reduce the US trade deficit of £754 billion and restore jobs in American industry.
Eswar Prasad, a professor at Cornell and a scholar at the Brookings Institution, quoted by Barrons.com, does not doubt that the era of free trade is ending. According to the economist, even if the trade war loses momentum, its economic effects will be long-lasting.
The White House's tariff plan
The White House announced that the planned tariffs will cover around 200 trade partners. The potential base rate is 10 percent, which may rise to 20 percent for countries with the largest trade deficit with the US. The list of countries that could be most affected by the new tariffs includes the European Union, China, Vietnam, and India.
Of particular interest to observers will be the decision regarding Mexico and Canada - two countries covered by the USMCA agreement. According to analysts at Beacon Policy Advisors, the administration may maintain the suspension of tariffs on goods covered by this agreement, while simultaneously introducing so-called retaliatory tariffs.
According to reports from Bloomberg, Chinese authorities are already taking steps to prevent some Chinese firms from investing in the US. Analysts interpret this as an attempt to create negotiating space in tariff talks.
This is how the markets are reacting to US plans
European financial markets reacted negatively to the announced introduction of US tariffs. The German DAX index lost 1.29 per cent in value, reaching a level of 22,244 points. The most significant declines within the index were seen in Bayer (-3.99 per cent), Sartorius AG Vz (-3.94 per cent), and Rheinmetall (-3.69 per cent).
The French CAC 40 also came under pressure, registering a decline of 0.6 per cent. The worst performers were Airbus Group (-3.42 per cent), Sanofi (-2.62 per cent), and Edenred (-2.33 per cent). On the Warsaw Stock Exchange, the WIG20 index lost 0.41 per cent, closing at 2,724 points.
Concerns grow in the US
Economists emphasise that uncertainty related to the introduced tariffs might affect inflation in the US. According to market analyst Brian Swint, one of the main adverse effects of the tariffs is that they will drive inflation, increasing the cost of doing business.
At the same time, the expert adds that the exact impact is difficult to predict, as the tariffs will not apply to all goods, and sellers may partially absorb the higher costs instead of passing them on entirely to consumers.
