President Donald Trump imposed the steepest American tariffs in a century as he steps up his campaign to reshape the global economy, sparking threats of retaliation and a selloff in markets around the world.
Trump announced Wednesday he will apply at least a 10% tariff on all exporters to the US, with even higher duties on some 60 nations, to counter large trade imbalances with the US. That includes some of the country’s biggest trading partners, such as China — which now faces a tariff of well above 50% on many goods — as well as the European Union, Japan and Vietnam.
“For years, hard-working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense,” Trump said during an event in the White House Rose Garden to unveil the so-called reciprocal tariffs. “Now it’s our turn to prosper.”
The move marks a dramatic follow-through on Trump’s long-held trade grievances, one that risks triggering retaliation from other countries and upends calculations for businesses and consumers at home. China and the EU, America’s largest trading partner, both said they were preparing to take countermeasures in response.
The US president has embraced tariffs as a tool to assert US power, revive manufacturing at home and extract geopolitical concessions — counter to the decades-old consensus that lower trade barriers help to foster ties among nations and prevent conflicts. Economists say the near-term result of his measures will likely be higher US prices and slower growth, or perhaps even a recession.
“There is still much uncertainty — and room for negotiation,” Maeva Cousin and Rana Sajedi of Bloomberg Economics wrote in a research note. “This could create sizable stagflation risks for the US economy, and pose major challenges to partners reliant on US demand.”
Global financial markets were hit by a sweeping selloff after Trump’s announcement, with US equity futures slumping as much as 4%. Stocks linked to global trade bore the brunt, with Apple Inc. down about 7%.
Meanwhile, gold hit an all-time high and the Japanese yen, traditionally a haven, soared. Ten-year Treasury yields fell toward the closely watched 4% level, their lowest since October, and a Bloomberg gauge of the dollar tumbled more than 1%.
Less than three months after returning to the White House, Trump has already erected trade barriers that are bigger by some measures than those imposed in the notoriously protectionist 1930s. Bloomberg Economics calculates that the effective tax rate the US now charges on more than $3 trillion of imported goods may climb to around 23% — higher than any point in more than a century.
