Trump's tariff move sparks global market turbulence
President Donald Trump plans to announce the details of implementing new tariffs on products imported into the United States today. The regulations will take effect immediately upon announcement, which could lead to the onset of a global trade war. Stock markets are already reacting to these announcements.
The so-called "day of liberation," as the administration refers to today's date, will bring a detailed plan for imposing tariffs, which are expected to reach the highest level since 1946. According to the US administration, the new regulations aim to reduce the US trade deficit of $918 billion and restore jobs in American industry.
Eswar Prasad, a professor at Cornell and a scholar at the Brookings Institution, quoted by Barrons.com, does not doubt that the era of free trade is ending. According to the economist, even if the tariff war loses momentum, its economic effects will be long-lasting.
The White House's tariff plan
The White House announces that the planned tariffs will cover around 200 trade partners. The potential base rate is 10 percent, which may increase to 20 percent for countries with the largest trade deficit with the US. The list of countries that could be most affected by the new tariffs includes the European Union, China, Vietnam, and India.
The decision regarding Mexico and Canada, countries covered by the USMCA agreement, will be particularly interesting for observers. According to analysts at Beacon Policy Advisors, the administration may maintain the suspension of tariffs on goods covered by this agreement while simultaneously introducing so-called retaliatory tariffs.
According to Bloomberg reports, Chinese authorities are already taking steps to prevent some Chinese firms from investing in the US. Analysts interpret this as an attempt to create negotiating space in tariff talks.
This is how the markets are reacting to US plans
European financial markets reacted negatively to the announced introduction of US tariffs. The German DAX index lost 1.29 percent in value, reaching 22,244 points. The most significant declines were seen in Bayer (-3.99 percent), Sartorius AG Vz (-3.94 percent), and Rheinmetall (-3.69 percent).
The French CAC 40 also suffered a 0.6 percent decline. The worst performers were Airbus Group (-3.42 percent), Sanofi (-2.62 percent), and Edenred (-2.33 percent). On the Warsaw Stock Exchange, the WIG20 index lost 0.41 percent, closing at 2,724 points.
Concerns grow in the US
Economists emphasize that uncertainty related to the introduced tariffs might affect inflation in the US. According to market analyst Brian Swint, one of the main adverse effects of the tariffs is that they will drive inflation, increasing the cost of doing business.
At the same time, the expert adds that the exact impact is difficult to predict, as the tariffs will not apply to all goods, and sellers may partially absorb the higher costs instead of passing them on entirely to consumers.
