Trump's tariffs spark global trade tensions with steep rates
New tariffs on goods imported to the USA from other countries took effect at midnight between Tuesday and Wednesday American time. Among them is a significant 104 percent tariff on China, confirmed just a few hours earlier.
Donald Trump announced last Wednesday, on the so-called Liberation Day, "retaliatory tariffs" on the entire world: 10 percent on all imports and 25 percent on foreign cars. He then presented a list of countries and the tariff rates that would apply to them. The general tariffs came into effect on April 5, while additional ones, for specific countries with which the USA has a trade deficit (57 countries), came into effect on April 9 at midnight American time.
Trump's tariffs: 57 countries affected by the new rate
During a conference in front of the White House, the US president argued that these would be "nice tariffs," not as high as what other countries impose on the USA. He asserted that this customs policy would make America rich again.
On the original list presented by Trump on April 2, there were over 70 countries.
Gigantic tariffs on China
A whopping 104 percent tariff has been imposed on China. White House spokeswoman Karoline Leavitt announced on Tuesday that Trump intends to follow through with his threat from Monday when he warned of an additional 50 percent tariff on imports from China if Beijing does not retract its 34 percent retaliatory tariffs announced on Friday, which are set to take effect on Thursday.
Tariffs, referred to as "reciprocal" by President Donald Trump, are theoretically intended to establish equal conditions in foreign trade. However, in practice, they do not mirror the trade barriers used by other countries or the size of their trade surplus with the USA. Consequently, countries applying high tariffs, like Brazil, received lower rates than those with low tariffs on US products, like the EU.
High rates were particularly applied to Asian countries, both America's allies such as Japan (24 percent), South Korea (25 percent), and Taiwan (32 percent), and countries with cheap production competing with China, like India (26 percent), Vietnam (46 percent), Bangladesh (37 percent), Indonesia (32 percent), and Cambodia (49 percent).
The new tariffs, however, will not apply to Canada and Mexico, on which President Trump had already imposed a 25 percent tax covering about half of the imports. Also excluded from these tariffs are steel, aluminum, cars, and car parts, which are subject to separate 25 percent tariffs, as well as copper, pharmaceuticals, semiconductors, and wood (these are to be additionally taxed in the future), as well as energy carriers and minerals unavailable in the USA.
According to calculations by Yale Budget Lab, if all new tariffs go into effect as promised by President Trump, the new average US tariff rate will increase from 2.2 to over 22 percent and will be the highest in over a century. Moreover, they will be significantly higher than tariffs in most countries around the world. As a result, the tariffs will exceed those introduced by the Smoot-Hawley Act in 1930 in response to the Great Depression. Those tariffs are considered by historians as one of the reasons for the prolonged duration of the global crisis.
Turbulence on the stock market
Even before the tariffs took effect, Trump's announcement caused one of the deepest drops in Wall Street history. Over the last four trading days, the Dow Jones index lost over 10 percent of its value and experienced record fluctuations due to uncertainty and conflicting signals from the Trump administration.
JP Morgan analysts predict a recession in the USA if the implemented tariffs remain in force. However, most analysts anticipate that the rates will be reduced through negotiations with individual countries.
