Trump announces sweeping tariffs, sparking fears of global trade war and sending global stocks plunging

U.S. President Donald Trump has announced a sweeping set of tariffs aimed at reshaping global trade. The new measures impose a baseline 10% tariff on imports from all countries, with higher targeted tariffs on over 60 nations, as part of an effort to reduce the U.S.’s trade deficit and boost domestic manufacturing.

The move sent shockwaves through global markets, with U.S. stocks plunging at the opening bell. The S&P 500 tumbled more than 4 percent, a huge daily drop for the index, echoing sharp declines in Asia and Europe as investors balked at the tariffs. The Dow Jones Industrial Average fell 2.6%, and the Nasdaq dropped 4.3%. Retail stocks were hit hardest, with companies like Lululemon, Nike, and Ralph Lauren seeing significant declines.

Trump’s Tariffs: A New Economic Policy

Trump announced far-reaching new tariffs on nearly all U.S. trading partners, from a 34% tax on imports from China to 20% on the European Union, in a Rose Garden announcement on Wednesday.

Trump outlined his decision to implement a series of tariffs designed to pressure trading partners into correcting what he claims has been a decades-long pattern of unfair trade practices. According to the White House, these tariffs will apply to goods from countries that have substantial trade surpluses with the U.S., as well as those that impose significant trade barriers against American exports.

“Taxpayers have been ripped off for more than 50 years,” Trump declared, positioning the new tariffs as a necessary corrective to an economic system that he described as exploitative. “For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike.” This rhetoric sets the stage for what could be a profound shift in U.S. trade policy. “But it is not going to happen anymore,” Trump declared as he unveiled national economic emergency to levy the tariffs.

The president’s announcement includes a 10% tariff on all imports, with heightened rates for specific countries. China will bear the brunt of the new policy, facing a 34% tariff, which is in addition to the existing 20% tariff already imposed. Other major trade partners like the European Union, Japan, and South Korea will see tariffs of 20%, 24%, and 25%, respectively. Countries such as Cambodia and Sri Lanka, which have significant export relationships with the U.S., will face even steeper tariffs, with rates reaching as high as 49%.

Economic Implications: Risks and Retaliation

While Trump frames these tariffs as a path to economic revival, the move has been met with skepticism and concern from both domestic and international quarters. Critics argue that the new tariffs could exacerbate inflation, disrupt supply chains, and lead to job losses across various industries. The U.S. stock market responded with immediate declines, with major indices such as the S&P 500 and Dow Jones Industrial Average dropping sharply. Tech stocks, in particular, took a hard hit, with companies like Apple, Nike, and Ralph Lauren seeing their values plummet.

The tariffs’ impact is not confined to the U.S. alone. Several countries have already signaled their intent to retaliate. China, for instance, has vowed to take countermeasures to safeguard its economic interests, while the European Union has warned that the new tariffs could lead to a “devastating blow” to global trade. According to EU President Ursula von der Leyen, “The consequences will be dire for millions of people around the globe.”

“With today’s announcement, U.S. tariffs will approach levels not seen since the Smoot-Hawley Tariff Act of 1930, which incited a global trade war and deepened the Great Depression,” according to Scott Lincicome and Colin Grabow of the Cato Institute, a libertarian think tank.

Olu Sonola, head of U.S. economic research at Fitch Ratings, predicted that the tariffs would result in a dramatic increase in the average tariff rate on U.S. imports, which could rise from 2.5% to 22% by 2024. “Many countries will likely end up in a recession,” Sonola added, highlighting the potential for widespread economic fallout.

Middle Class struggles: Rising prices and economic uncertainty

For American consumers, the tariffs could lead to higher prices on everyday goods. From electronics to clothing, essential items could become significantly more expensive as companies pass on the costs of higher tariffs to consumers. The United States’ large trade deficit, which reached $918 billion in 2024, is central to Trump’s rationale for the tariffs, but many economists warn that a trade war could undermine economic stability and fuel inflation, rather than curbing it.

The impact on global supply chains is also a major concern. Countries like Bangladesh and Sri Lanka, which supply a significant portion of U.S. apparel imports, have already expressed anxiety over the potential economic consequences. “We will have to write our obituary notice,” said Tuli Cooray, a consultant at the Joint Apparel Association Forum of Sri Lanka, referring to the anticipated difficulties faced by the garment industry in Sri Lanka, where tariffs have risen to 44%.. “Forty-four percent is no joke.”

What happens next

A 25% tariff on all foreign-made automobiles will be implemented on April 3, while the 10% baseline tariffs will take effect on April 5. The ‘reciprocal tariffs’ are set to begin on April 9.

While President Trump framed the tariffs as a means of reclaiming U.S. economic independence, the long-term consequences of such sweeping measures remain uncertain. The U.S. administration has claimed that the tariffs will bring in hundreds of billions in new revenue and restore fairness to global trade, but the risks of escalating trade tensions, retaliation from other nations, and the potential for a global recession are high.

As the tariffs go into effect on April 9, the global economy faces a period of uncertainty. Stock markets continue to react to the announcement, with investors flocking to safe-haven assets like gold and government bonds. The world’s largest economies, including China, the European Union, and Mexico, are preparing their countermeasures, potentially plunging the U.S. and its trading partners into a broader economic conflict.

Full list of Trump’s tariffs

U.S. President Donald Trump announced new tariffs at the “Make America Wealthy Again” trade announcement event in the Rose Garden at the White House on April 2, 2025, in Washington, DC.

President Trump explained that the new tariffs on U.S. trading partners were “reciprocal,” meaning they were designed to mirror the trade barriers those countries impose on American goods. Initially, he did not clarify how the rates were determined, but later White House officials revealed that the tariff rates were calculated based on the U.S. trade deficit with each country, divided by the value of that country’s exports to the U.S. Trump then halved the resulting figure, claiming he was being “kind.” While Trump suggested the tariffs also addressed non-monetary trade barriers and unfair practices, analysts believe the formula used was a simple approach to quickly implement the policy.

Full List of Countries hit with U.S. Tariffs