Key points
- Tariffs have created a “national crisis”: Japanese Premier Ishiba
- See a 60pc chance of global economy entering recession by year end: JP Morgan
- US has abandoned its historic role: Canadian Premier Carney
ISLAMABAD: Countries around the world threatened to wage a trade war with the United States as President Donald Trump’s sweeping tariffs fed expectations for a global downturn and sharp price hikes for swathes of goods in the world’s biggest consumer market.
According to Reuters, the penalties announced by Trump on Wednesday triggered a plunge in world financial markets and drew condemnation from other leaders reckoning with the end of a decades-long era of trade liberalisation.
In Japan, one of United States’ top trading partners, Prime Minister Shigeru Ishiba said that the tariffs had created a “national crisis” as a plunge in banking shares on Friday set Tokyo’s stock market on course for its worst week in years.
Investment bank JP Morgan said it now sees a 60 per cent chance of the global economy entering recession by year end, up from 40 per cent previously.
But there were conflicting messages from the White House about whether the tariffs were meant to be permanent or were a tactic to win concessions, with Trump saying they “give us great power to negotiate.”
$2,300 iPhone
According to Reuters, the US tariffs would amount to the highest trade barriers in more than a century: a 10 per cent baseline tariff on all imports and higher targeted duties on dozens of countries.
That could jack up the price for US shoppers of everything from cannabis to running shoes to Apple’s iPhone. A high-end iPhone could cost nearly $2,300 if Apple passes the costs on to consumers, based on projections from Rosenblatt Securities.
Businesses raced to adjust. Automaker Stellantis said it would temporarily lay off US workers and close plants in Canada and Mexico, while General Motors said it would increase US production.
Canadian Prime Minister Mark Carney said the United States had abandoned its historic role as a champion of international economic cooperation.
“The global economy is fundamentally different today than it was yesterday,” he said as he announced several countermeasures.
Elsewhere, China vowed retaliation for Trump’s 54 per cent tariffs on imports from the world’s No 2 economy, as did the European Union, which faces a 20 per cent duty.
French President Emmanuel Macron called for European countries to suspend investment in the United States.
According to Le Monde, in the face of Donald Trump’s protectionist offensive, the European Union (EU) has struggled to respond firmly. The Commission, which is responsible for trade matters, did threaten the United States with painful retaliatory measures, mentioning new tariffs on American goods and reprisals against tech giants and the financial sector. However, its president, Ursula von der Leyen, was vague and emphasized the need to negotiate. “It is not too late,” she repeated, Thursday, April 3, like an incantation.
Economic deal
According to Reuters, other trading partners, including Japan, South Korea, Mexico and India, said they would hold off on any retaliation for now as they seek concessions. Britain’s foreign minister said it was working to strike an economic deal with the United States.
But Washington’s allies and rivals alike warned of a devastating blow to global trade.
The tariffs “clearly represent a significant risk to the global outlook at a time of sluggish growth,” said IMF Managing Director Kristalina Georgieva, calling on Washington to work to resolve trade tensions with its partners and reduce uncertainty.
US Commerce Secretary Howard Lutnick and senior trade adviser Peter Navarro both told cable news programs on Thursday the president would not back off, and that the tariff increases were not a negotiation.
Trump then appeared to contradict them, telling reporters, “The tariffs give us great power to negotiate. Always have. I used it very well in the first administration, as you saw, but now we’re taking it to a whole new level.”
