World Economy Reels From Tariff Shock As Trump Begins Trade War

President Donald Trump’s move to impose sweeping tariffs on U.S. imports sparked threats of retaliation on Thursday 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 liberalisation that has shaped the global order for decades.

Trump’s latest tariffs, announced on Wednesday, coupled with a series of similar moves since he returned to office on January 20, mark the most dramatic escalation in US tariffs in almost a century.

Trump said he would impose a 10 per cent 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.

Invoking the International Emergency Economic Powers Act of 1977, Trump announced a 10 percent tariff on all countries, scheduled to take effect on Saturday, April 5.

The countries facing only a 10 percent tariff include:
• United Kingdom
• Australia
• Singapore
• Brazil
• New Zealand
• Türkiye
• United Arab Emirates
• Saudi Arabia
• Chile

About 60 countries will face individualised tariffs, calculated to be roughly half of the tariffs and other barriers that the Trump administration claims they charge the US.

The key trading partners subject to these customised tariff rates include:
• China: 54 percent
• Cambodia: 49 percent
• Laos: 48 percent
• Vietnam: 46 percent
• Sri Lanka: 44 percent
• Thailand: 36 percent
• Taiwan: 32 percent
• South Africa: 30 percent
• India: 26 percent
• Japan: 24 percent
• European Union: 20 percent
• Philippines: 17 percent

According to Fitch Ratings, the new U.S. tariffs are the highest in more than a century. As investors digested the news on Thursday, stock markets in Beijing and Tokyo sank to multi-month lows. European shares were also down sharply in morning trade, with top goods exporter Germany hit hard.

Germany’s IW research institute estimated the tariffs would wipe 750 billion euros ($833.63bn) from the EU economy.

Trump said the “reciprocal” tariffs were a response to duties and other non-tariff barriers put on U.S. goods. He argued that the new levies will boost manufacturing jobs at home.

Facing 54 per cent tariffs on exports to the U.S., 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.

“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.

U.S. Treasury Chief Scott Bessent earlier warned that any retaliatory moves would only lead to escalation. Among close U.S. allies, the European Union was targeted with a 20 per cent rate, Japan with 24 per cent, South Korea with 25 per cent and Taiwan with 32 per cent. Even some tiny territories and uninhabited islands in the Antarctic were hit by tariffs, according to a list posted by the White House on X.

Trump’s tariffs also looked set to shake up established trade ties in favour of new relationships.
“Opportunities for new alliances are emerging that we should use determinedly and decisively,” said Robert Habeck, the economy minister of Germany, whose biggest trading partner is the United States.

Recent meetings showed “that what we think is what they think, too: forging an alliance, for example, with Canada and Mexico, is the order of the day,” he said, adding “we, the European Union, should pragmatically explore free trade options with other countries.”

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 decades-old transatlantic ties, with the U.S. acting as the ultimate guarantor of European security.

The issue spilled over into a meeting of the NATO alliance in Brussels on Thursday, where the U.S. is pushing for countries to sharply raise their defence spending.

Norway’s Foreign Minister Espen Barth Eide said NATO’s founding after World War Two was based on countries not using “coercive” economic measures against one another, while German, French, and Belgian foreign ministers also criticised the tariffs.

Anthony Albanese, prime minister of Australia, a nation often described as America’s “deputy sheriff” in Asia, said Trump’s move was not the act of a friend.

“The Trump administration’s tariffs have no basis in logic, and they go against the basis of our two nations’ partnership.”

Outside economists have warned that tariffs could slow the global economy, raise the risk of recession, and increase living costs for the average American family by thousands of dollars.

“This is how you sabotage the world’s economic engine while claiming to supercharge it,” said Nigel Green, CEO of global financial advisory deVere Group. “The reality is stark: these tariffs will push prices higher on thousands of everyday goods – from phones to food – and that will fuel inflation at a time when it is already uncomfortably persistent.”

Canada and Mexico, the two largest U.S. trading partners, already face 25 per cent tariffs on many goods and will not face additional levies from Wednesday’s announcement.

They will be hit by a separate set of tariffs on auto imports that Trump announced last week will take effect starting on Thursday.

Tariff concerns have already slowed manufacturing activity across the globe, while also spurring sales of autos and other imported products as consumers rush to make purchases before prices rise.

“Now, as the reality of the new tariffs sinks in, companies around the world must weigh up how to adjust, with their options limited and unpalatable for their customers.

“It’s an immense difficulty for Europe. I think it’s also a catastrophe for the United States and for U.S. citizens,” said French Prime Minister François Bayrou.

World Economy Reels From Tariff Shock As Trump Begins Trade War is first published on The Whistler Newspaper