Countries around the world are preparing to increase trade tensions with the United States as Donald Trump’s tariffs trigger economic concerns. The decision raised concerns about rising prices in the U.S., the world’s largest consumer market.
On Wednesday, Trump introduced tariffs that led to a sharp decline in global financial markets on Thursday. Other world leaders criticised the move, seeing it as the end of decades of trade liberalisation. There were mixed messages from the White House regarding whether these tariffs were a permanent measure or a negotiation tactic. Trump said, “The tariffs give us great power to negotiate.”
The new U.S. tariffs include a 10% baseline tariff on all imports, with even higher duties on major trading partners. This could lead to increased prices on several consumer goods, including electronics. According to Rosenblatt Securities, if Apple passes on the added costs, a high-end iPhone could cost nearly $2,300.
Read more: Donald Trump’s Tariffs Spare No Country: Global Economic Impact
Businesses are adjusting to the changes. Automaker Stellantis announced temporary layoffs in the U.S. and plant closures in Canada and Mexico. General Motors stated it would boost domestic production.
Canadian Prime Minister Mark Carney criticised the U.S. for moving away from its role as a leader in international economic cooperation. He said, “The global economy is fundamentally different today than it was yesterday.” Canada announced limited countermeasures in response.
The Global Impact
China and the European Union pledged to retaliate. China faces a 54% tariff, while the EU is subject to a 20% duty. French President Emmanuel Macron called for European countries to stop investing in the U.S. Meanwhile, Japan, South Korea, Mexico and India are delaying any response while seeking negotiations. Japan’s Prime Minister Shigeru Ishiba called the tariffs a “national crisis.”
IMF Managing Director Kristalina Georgieva warned, “It is important to avoid steps that could further harm the world economy.” She urged all parties to resolve trade tensions.
U.S. officials gave conflicting statements. Commerce Secretary Howard Lutnick and trade adviser Peter Navarro insisted the tariffs were not up for negotiation, but Trump later said, “The tariffs give us great power to negotiate.”
Markets suffered significant losses. The Dow fell nearly 4%, the S&P 500 dropped almost 5%, and the Nasdaq declined 6%, marking the worst trading day since March 2020. Companies with overseas production, including Nike and Apple, saw their stocks fall by 14% and 9%, respectively.
Asian markets also struggled, with Japan’s Nikkei down 1.85%. Chinese markets were closed for a holiday. Trump defended the tariffs as a response to trade barriers against U.S. goods. Vice President JD Vance said, “That’s fundamentally what this is about, the national security of manufacturing.”
Some experts believe the tariffs could increase inflation, raise recession risks, and cost American families thousands of dollars. Trump’s move also strains U.S. alliances in Asia. Japan and South Korea, which host U.S. military bases, face 24% and 25% tariffs, while Taiwan faces a 32% tariff.
Canada and Mexico were not targeted in the latest tariffs but already face 25% duties on several goods. The new tariffs on auto imports further strain their trade relationship with the U.S.
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