US President Donald Trump has announced his much-awaited “mutual” tariff plans, moving back on financial markets amid the growing fears of the world trade war.
On Wednesday, Trump announced a 10% “minimum baseline tariff” on almost all imports into the United States. The higher obligations of the target countries will be incrementally incrementally shortly afterwards.
He argued that the new import tax was designed to reduce the trade deficit and bring foreign manufacturing back to the US coast. He also said they pave the way for future cuts in taxes.
When Trump targeted the global trading system, he said he “destroyed” the United States, so his tariffs spurred an immediate backlash, with some of America’s biggest trading partners pledging to take action.
What was announced?
Invoking the International Emergency Economic Force Act of 1977, Trump announced 10% tariffs in all countries scheduled to come into effect on April 5th.
He then made it clear that countries with a high trade surplus with the US or that impose a high duty on US imports have “individualized” tariffs. These duties will come into effect four days on April 9th.
Trump explained that his team calculated “individualized” tariffs by taking half of what those countries claimed to have charged the United States for their exports.
So the European Union is heading towards a 20% tariff, while the UK is being slapped with 10% collection.
Meanwhile, China was allocated 34%. This was allocated in addition to the 20% tariffs Trump had already imposed on Chinese imports since he took office on January 20th. Vietnam is involved in 46% and Thailand is involved in 36%.
Although the two largest US trading partners and their neighbors, Mexico and Canada, were missing from the list, they already face 25% tariffs on all exports to the US that are not covered by the US Mexico and Canada (USMCA) trade agreement.
Mutual tariffs do not apply to some products, such as copper, semiconductors, energy and “specific minerals not available in the United States,” according to the White House fact sheet.
Mutual duties may also be subject to change. Tariffs may be negotiated with trading partners “to take important steps to improve non-compatible trade arrangements,” according to White House documents.
What did Trump say?
“For decades, our country has been plundered, plundered, raped and looted by both our friends and our enemies,” Trump told an audience of manufacturing workers, ministers and journalists.
“Foreign leaders stole our work. Foreign con artists plundered our factories. And foreign scavengers tore apart the dreams of once beautiful America.”
However, he declared Wednesday marked a turning point in US history, marking the end of a “vicious attack” that he said the country had weathered.
“April 2, 2025 will be remembered forever as the day American industry was reborn, the day America’s fate was reclaimed,” Trump said.
“We charge them about half of what they charge us, so the tariffs aren’t entirely reciprocal,” Trump said.
“I could have done that, but that would have been tough in many countries. We didn’t want to do that,” he added.
What did the target countries say in response?
Within minutes of Trump’s announcement, world leaders began to accuse the tariffs of harm.
China’s Commerce Ministry has pledged “measures to protect its own rights and interests” in response to “bullying,” the statement said in a statement. The US tariffs on China are currently virtually 54%.
Beijing stopped rather than saying that it would impose retaliatory measures, but the statement reads, “The United States portrayed so-called “mutual tariffs” based on subjective and unilateral ratings that contradict international trade rules.”
It urged the Trump administration to cancel tariffs and “determine differences with trading partners through equal dialogue.”
In the past, Beijing and Taipei appeared to be on the same page.
Taiwan labeled the tariffs as “very unreasonable.” Cabinet spokesman Michelle Lee said Taipei “deeply regretted” the announcement that Trump had exported 32% tariffs.
Australian Prime Minister Anthony Albanese said tariffs were “not an act of a friend” and “completely unjust.”
European Commission Chairman Ursula von der Leyen has addressed the EU’s new 20% tariffs and called the scale a “major blow to the global economy.”
“The outcome will be disastrous for millions of people around the world,” she said, adding that it will cost food, transport and medicine.
Even Canada was exempt from the latest tariffs.
“We must act purposefully during this crisis,” Canadian Prime Minister Mark Carney wrote on social media. “My government will fight tariffs on us,” he said.
Which countries clash with their own measures?
Mutual tariffs will not begin until April 9th, so countries will be six days trying to cut transactions with the Trump team. However, some may respond with retaliatory tariffs.
Canada is one of the US trading partners that has committed to dealing with tariffs with retaliation measures.
Meanwhile, the European Union is “ready for a trade war” with the United States and could “attack online services,” said French government spokesman Sophie Plymouth.
She said the EU is preparing a two-stage rebuttal with a “first response” around mid-April regarding aluminum and steel.
The EU will then target “all products and services” as well, with measures being prepared probably at the end of April, Primas said, adding that this is still under discussion.
“China will release some kind of retaliation…” Nick Maro, the leading economist for the Economist Intelligence Unit, told Al Jazeera.
Which countries prefer diplomacy?
Mexico, on the other hand, is in the way. On Wednesday, Mexican President Claudia Sheinbaum said he would avoid pursuing tariffs “like Tatts.”
Similarly, British Prime Minister Kiel Starmer excluded immediate retaliation and promised on Thursday to maintain his “cool head in the coming days.”
Business Secretary Jonathan Reynolds told the House on Thursday that Westminster was in talks with Washington to ensure a transaction aimed at avoiding or reducing UK tariffs.
In Asia, few countries are willing to take on Trump and risk further retaliation, Malo said.
With the exception of China, “many other Asian markets are not in fact in a position to retaliate,” he said, because of “many other Asian markets, due to the importance of the US as a source of ultimate demand.”
Dario Perkins, managing director of TS Lombard, a London-based financial research firm, agreed widely, saying most countries support “other policy levers” over retaliation fees.
“I think central banks will ease monetary policy. [by lowering interest rates to try and boost growth],” Perkins told Al Jazeera.
Still, he said, “World trade is much weaker, and international supply chains are shortened. The multilateral era is dying.”
How did the market respond?
The market has fallen as investors, from the US to Asia, sought the most sharp turn towards protectionism by the world’s largest economy since the 1930s.
The Dow Jones industrial average lost 2.6% on Wednesday, reducing short-term losses for US companies.
Germany’s DAX index fell 1.7% on Thursday, while Paris’ CAC 40 fell 1.8%. The UK FTSE 100 lost 1.2%.
In Asian trading, Tokyo’s Nikkei 225 index fell briefly on Thursday, causing a huge hit by carmakers and banks.
As global stocks fell, investors were rushing to buy gold. This is a traditional safe inventory asset during the market volatility period.
The precious metal hit a record high of $3,167.84 (28.3g) per ounce on Thursday.
Market players are worried about the knock-on effects of international supply chains, particularly in the US, of inflation and recession.
Goldman Sachs recently raised its estimates for the possibility of a US recession over the next 12 months, as it rose from the previous 20% to 35%.
“It’s our true GDP, plausible,” UBS Bank said on Thursday. [in 2025] If these tariffs do not reverse soon, we can compromise by 1.5-2%, and inflation could increase to nearly 5%. ”
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