Trump stokes global trade war as world reels from US tariff shock
WASHINGTON, 1 days ago
Global markets slumped on Thursday after President Donald Trump announced a major round of tariffs on US imports. The world’s biggest economies reacted swiftly to the new levies, a significant escalation of trade tensions with the US and some warned of retaliation, said media reports.
Trump's move to impose sweeping tariffs on US imports sparked threats of retaliation as companies and governments rushed to count the costs from an escalating trade war that threatens to shake up global alliances.
The penalties announced on Wednesday unleashed turbulence across world markets and drew condemnation from other leaders facing the end of an era of trade liberalization that has shaped the global order for decades, reported Reuters.
Trump said he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of the country's biggest trading partners, hammering goods from premium Italian coffee and Japanese whisky to sportswear made in Asia.
Facing 54% tariffs on exports to US, the world's No. 2 economy China vowed countermeasures, as did the European Union, as Washington's allies and rivals alike criticised moves they fear will deal a devastating blow to global trade.
Trump had said for weeks that he would impose “reciprocal tariffs” on allies and adversaries, but the tariffs announced on Wednesday were far higher than experts had expected, and are likely to drive up prices for American consumers and manufacturers.
The US will subject Chinese goods to a staggering new tariff of 34% on top of the tariffs that Trump had already imposed since January.
The European Union’s tariff was set at 20%, Japan’s at 24%, Britain’s at 10% and India’s at 26%. Trump said little about the methodology behind those calculations.
Among close US allies, South Korea was hit with a 25% tariff and Taiwan with 32%. Even some tiny territories and uninhabited islands in the Antarctic were hit by tariffs, said the report.
Trump's measures looked set to shake up established trade ties in favour of new relationships, reported The New York Times.
"Uncertainty will spiral and trigger the rise of further protectionism. The consequences will be dire for millions of people around the globe," EU chief Ursula von der Leyen said, adding the 27-member bloc was preparing to hit back if talks with Washington failed.
Trump's tariffs come at a time when relations with much of Europe have plummeted over issues such as the war in Ukraine and the upending of transatlantic ties, under which the US has acted as the ultimate guarantor of European security, rerported Reuters.
Ursula said the bloc would be united in its response to the tariffs. "If you take on one of us, you take on all of us," she stated.
The duties posed a particular threat to attempts to revive the largest economy in Europe, Germany’s, which has been stagnant.
Global stocks tumbled and investors sought safe-haven bonds and gold. According to Fitch Ratings, the new US tariffs are the highest in more than a century.
Barclays and BofA Global Research warned the US economy faced a higher risk of slipping into recession, while Germany's IW research institute estimated the tariffs would wipe 750 billion euros ($833.63 billion) from the EU economy.
Trump said the "reciprocal" tariffs were a response to duties and other non-tariff barriers put on US goods. He argued that the new levies will boost manufacturing jobs at home.
Vice President JD Vance on Thursday said he knows Americans are worried about costs in the face of what he noted was "a big change" with tariffs, and cautioned that it would take time to see lower prices or more US jobs and manufacturing, reported Reuters.
"We know a lot of Americans are worried," he told Fox News. "What I'd ask folks to appreciate here is that we are not going to fix things overnight."
Trump framed his policies as a response to a national emergency, saying that tariffs were needed to boost domestic production.
Trump could have tried to fix the rules governing global trade, which he says allies have abused to the detriment of the US economy and American consumers, said Eswar Prasad, a professor of trade policy at Cornell University. Instead, he said, “Trump has chosen to blow up the system governing international trade.”
The Trump administration was talking to all major trading partners about ways to bring down the new tariffs, Commerce Secretary Howard Lutnick said, stressing that countries needed to treat the US fairly.
Markets in Asia and Europe dropped sharply and US futures were down. China vowed to take countermeasures to 'safeguard its own rights and interests.' Its state media described the tariffs as 'self-defeating bullying.'
Meanwhile Asian heavyweight India said it was carefully examining the impact of US tariffs.
The country's Department of Commerce is “carefully examining the implications” and opportunities resulting from President Trump’s broad tariffs announced on Wednesday, it said on Thursday.
The department said that the additional US duties on India come to 27%. A list of reciprocal tariffs shared by Trump on his Truth Social media platform outlined a 26% levy imposed on the world’s fifth largest economy.
Following on Indian Prime Minister Narendra Modi and Trump’s February agreement to more than double the bilateral trade to $500 billion by 2030, 'discussions are ongoing between Indian and U.S. trade teams for the expeditious conclusion of a mutually beneficial, multi-sectoral Bilateral Trade Agreement,' it stated.
The response from Japan, the largest overseas investor in the US, was more restrained. Prime Minister Shigeru Ishiba called the tariffs “extremely regrettable.”
But he refrained from talk of retaliation, saying that his government was trying to impress upon the Trump administration that Japan is helping the US to industrialize again.
Britain also did not suggest it would immediately retaliate. Instead, Prime Minister Keir Starmer said negotiations toward a trade deal with the US would continue.
Business groups, trade experts, economists, Democratic lawmakers and even a few Republicans swiftly denounced the tariffs, while some industries scrambled to understand how they would be affected.
Meanwhile, US Treasury Secretary Scott Bessent urged other countries to stay calm and not to issue retaliatory tariffs against the US.
"One of the messages that I like to get out tonight is, Everybody, sit back. Take a deep breath. Don't immediately retaliate. Let's see where this goes. Because if you retaliate, that's how we get escalation," he said while speaking to CNN.
"Remember that the history of trade is, we are the deficit country. The deficit country has an advantage. They are the surplus countries. The surplus countries, traditionally, always lose any kind of a trade escalation."
"So I'd, as a student of economic history, or a professor of economic history, I'd advise against it. I would say that doing anything rash would be unwise, he noted.
On whether the White House is in the mindset to negotiate with countries on tariffs:
"I think the mindset is, Let's just see where we are, and then we'll see how President Trump feels about all this…It's the how -- how are we seeing things? I think the real thing is going to be, and that he's going to gauge the tariff level by, it won't be necessarily the calls from the leaders," stated Bessent.
"It's going to be the calls from industry, saying, OK, how can we get these off? And he's going to say, You can get it off, bring your factory to the US," he noted.
On what he would say to people in the auto industry worried about these tariffs: “Buy American.”
