US President Donald Trump has cautioned foreign nations that they will need to pay “a lot of money” to lift extensive tariffs, describing these duties as “medicine” and causing further turmoil in global financial markets.
Asian stock indices plummeted across the board, and US stock futures traded significantly lower as investors worried that the tariffs might lead to increased prices, diminished demand, and potentially a global recession.
During a conversation with reporters aboard Air Force One yesterday, Mr. Trump indicated he was unconcerned about the substantial losses that have already resulted in the loss of trillions of dollars in equity market value worldwide.
“I don’t want anything to go down. But sometimes you have to take medicine to fix something,” he mentioned while returning from a weekend of golfing in Florida.
“They are coming to the table. They want to talk, but there’s no discussion unless they pay us a lot of money on a yearly basis,” Mr. Trump stated.
A board displaying stock prices at the Taiwan Stock Exchange in Taipei
Mr. Trump’s extensive tariffs announced last week were met with criticism from other world leaders and prompted retaliatory tariffs from China, the world’s second-largest economy.
Billionaire fund manager Bill Ackman, who previously endorsed Mr. Trump’s candidacy, urged for a pause on the tariffs to prevent an “economic nuclear war.”
Investors and political figures are grappling with whether Trump’s tariffs represent a new permanent policy or a negotiating maneuver to gain concessions from other nations.
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On US talk shows yesterday, Mr. Trump’s economic advisers aimed to depict the tariffs as a strategic realignment of the US in the global trade landscape.
Treasury Secretary Scott Bessent noted that over 50 countries had commenced negotiations with the US since last Wednesday’s announcement. Commerce Secretary Howard Lutnick indicated that the tariffs would remain in place “for days and weeks.”
Japan, a close US ally in Asia, is one of the countries seeking a resolution but its leader, Shigeru Ishiba, commented this morning that results “won’t come overnight.”
However, investors are not waiting around.
As Mr. Ishiba spoke in parliament, Tokyo’s Nikkei dropped to a one-and-a-half-year low, primarily driven by the country’s banks—some of the largest lenders by assets in the world—which have lost nearly a quarter of their market value over the past three trading days.
The widespread market sell-off—also accompanied by a decline in global oil prices—arose as investors speculated that the growing risk of recession might prompt US interest rate cuts as early as May.
White House economic adviser Kevin Hassett attempted to alleviate concerns that the tariffs were part of a strategy to exert pressure on the US Federal Reserve to lower interest rates, asserting that there would be no “political coercion” of the central bank.
JP Morgan economists now project that the tariffs will cause a decline in full-year US gross domestic product (GDP) by 0.3%, a significant drop from a prior estimate of 1.3% growth.
Goldman Sachs anticipates that the tariffs could reduce GDP growth in China by at least 0.7 percentage points this year, prompting an acceleration in fiscal easing.
Both Wall Street banks currently assess the risk of a global recession at 60% and 45%, respectively.
This uncertainty has clouded the perspective for global policymakers. The Reserve Bank of New Zealand, the first major central bank to convene since Mr. Trump’s tariff announcement, is expected to cut rates tomorrow, which economists suggest could be the first of several reductions this year.
US customs agents began enforcing Mr. Trump’s unilateral 10% tariff on all imports from multiple countries starting Saturday. Higher “reciprocal” tariff rates, ranging from 11% to 50% depending on the country, are set to come into effect on Wednesday.
Some other governments have shown an eagerness to engage with the US to avoid the tariffs.
Taiwan’s President Lai Ching-te offered zero tariffs as a foundation for negotiations with the US, committing to eliminate trade barriers and stating that Taiwanese companies would increase their investments in the US.
Israeli Prime Minister Benjamin Netanyahu announced he would seek an exemption from a 17% tariff on Israeli goods in a scheduled meeting with Mr. Trump today.
An official from the Indian government stated that the country does not intend to retaliate against a 26% tariff and revealed that discussions are ongoing with the US regarding a potential agreement.
Vietnamese leader To Lam agreed during a phone call with Mr. Trump on Friday to negotiate a deal aimed at removing tariffs after the Southeast Asian manufacturing hub faced some of the highest duties globally.
Mr. Trump labeled the discussions as “very productive.”
