US President Donald Trump’s “reciprocal” tariffs on numerous countries have officially taken effect, imposing hefty 104% duties on Chinese products and 20% on goods from the EU. This escalation has further intensified his global trade war, even as he prepares for negotiations with several nations.
Mr. Trump’s aggressive tariffs have disrupted a long-standing global trading order, instigated fears of a recession, and caused a significant decline in worldwide stock markets.
He also mentioned that the US will soon reveal a “major” tariff on pharmaceutical imports.
The S&P stock market closed below 5,000 for the first time in nearly a year yesterday, edging closer to a bear market, which is defined as being 20% below its most recent peak.
Goods already en route as of midnight will be exempt from the new duties.
A sell-off across Asian markets resumed today after a short pause, with Japan’s Nikkei index down over 3%, and South Korea’s won hitting a 16-year low. US stock futures also indicated a fifth consecutive day of losses on Wall Street.
Mr. Trump has delivered mixed messages to investors about the future of the tariffs, calling them “permanent” while also claiming they are pressuring other leaders to enter negotiations.
“We have many countries approaching us that want to strike deals,” he stated at a White House event yesterday afternoon. He later expressed his expectations that China would also seek an agreement.
The Trump administration has arranged discussions with South Korea and Japan, two key allies and significant trading partners, while Italian Prime Minister Giorgia Meloni is scheduled to visit next week.
The possibility of deals with other nations had initially lifted stock markets earlier yesterday, but US stocks had relinquished their gains by the end of the trading session.
Mr. Trump nearly doubled the duties on Chinese imports from 54% last week, reacting to counter-tariffs China announced during the same period. China has promised to resist what it perceives as coercion.
Economists warn that US consumers can expect increased prices on a wide range of products, from sneakers to wine, due to the ongoing trade conflict.
US consumers are likely to face higher prices on goods.
The comprehensive impact of today’s tariffs might not be immediate, as goods already in transit as of midnight are exempt from the new rates, provided they arrive in the US by May 27.
A recent Reuters/Ipsos poll found that nearly three-quarters of Americans expect prices for everyday items to rise within the next six months.
Mr. Trump’s previously announced across-the-board 10% tariffs on all imports from various countries began on Saturday. The latest set of duties, which came into effect at 12:01 am Eastern time (5:01 am Irish time), targets nations deemed as “ripping off” the US, according to Mr. Trump.
This list includes several of the United States’ closest allies, such as the European Union, which has been subjected to a 20% tariff. Vietnam, which gained from the shift of US supply chains away from China during Mr. Trump’s initial trade war with China, is facing a 46% tariff.
Mr. Trump has asserted that these tariffs respond to barriers imposed on US products that hinder American enterprises. He has also accused nations like Japan of devaluing their currencies for competitive advantage, a claim Japan has denied.
Japan’s finance minister indicated that trade discussions with the US could encompass foreign exchange rates.
