Trump's tariff tsunami: Global markets brace for impact
New tariffs on goods imported into the USA from other countries came into effect at midnight from Tuesday to Wednesday, American time. Among these 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 subsequently presented a list of countries and their respective tariff rates—20% for the European Union, for instance. The general tariffs took effect on 5 April, while additional tariffs, targeting individual countries with which the USA has a trade deficit (57 countries in total), were implemented on 9 April at midnight American time.
Trump's tariffs. 57 countries covered
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 claimed that such a customs policy would lead to greater prosperity for America.
The initial list presented by Trump on 2 April included over 70 countries.
Gigantic tariffs on China
A 104% tariff has been imposed on China. White House spokeswoman Karoline Leavitt stated on Tuesday that Trump intends to follow through on his threat from Monday. He warned of an additional 50% tariff on imports from China if Beijing does not retract its announced 34% retaliatory tariffs due to come into effect on Thursday.
The tariffs—termed "reciprocal" by President Donald Trump—are theoretically designed to establish equal conditions in foreign trade. However, in practice, they neither mirror the trade barriers used by other countries nor correspond to the size of their trade surplus with the USA. Consequently, countries with high tariffs, like Brazil, received lower rates than those with low tariffs on US products, like the EU.
High rates were particularly imposed on Asian countries, both America's allies such as Japan (24%), South Korea (25%), or Taiwan (32%), and countries that are sources of low-cost production competing with those in China, such as India (26%), Vietnam (46%), Bangladesh (37%), Indonesia (32%), or Cambodia (49%).
The 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 subject to separate 25% tariffs, as well as copper, medicines, semiconductors, and timber (these are to be taxed additionally 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 are implemented as announced by President Trump, the new average US tariff rate will rise from 2.2% to over 22%, marking the highest rate in over a century. It would also be significantly higher than tariffs in most countries globally. As a result, the tariffs will exceed even those introduced by the Smoot-Hawley Act in 1930 in response to the Great Depression. Historians consider those tariffs to be one of the causes of the prolonged global crisis.
Stock market turbulence
Even before the tariffs came into effect, Trump's announcement triggered one of the steepest declines in Wall Street's history. Over the past four trading days, the Dow Jones index lost over 10% of its value, experiencing record fluctuations caused by uncertainty and mixed signals from the Trump administration.
JP Morgan analysts foresee a recession in the USA if the imposed tariffs persist. However, most analysts anticipate that the rates will reduce following negotiations with individual countries.
