KEY POINTS
- Trump defends tariffs, calling them part of an “economic revolution”
- Trump’s 10% global tariff starts in midnight on Saturday
- China retaliates with matching tariffs and rare earth export restrictions
- Beijing also announces plans to sue US at the WTO
- Global markets plunge, with US stocks losing $6.6 trillion in two days
- EU, Japan, and others criticise the move and prepare countermeasures
- Oxford Economics warns average US tariff rate could rise to 24%, exceeding Great Depression-era levels
- EU mulls Anti-Coercion Instrument as internal debate continues to respond to US actions
WASHINGTON: US President Donald Trump on Saturday doubled down on the sweeping new tariffs he unleashed on countries around the world, warning Americans of pain ahead, but promising historic investment and economic prosperity.
The US President has triggered a wave of global economic tension and market turmoil after announcing sweeping new tariffs on imports from nearly all US trading partners, a move he described as the centrepiece of an “economic revolution” designed to protect American jobs and industries.
“We have been the dumb and helpless ‘whipping post,’ but not any longer. We are bringing back jobs and businesses like never before,” Trump wrote on his Truth Social platform.
“This is an economic revolution, and we will win,” he added. “HANG TOUGH, it won’t be easy, but the end result will be historic.”
A 10 percent “baseline” tariff came into place just after midnight, hitting most US imports except goods from Mexico and Canada as Trump invoked emergency economic powers to address perceived problems with the country’s trade deficits.
The trade gaps, said the White House, were driven by an “absence of reciprocity” in relationships and other policies like “exorbitant value-added taxes.”
Come April 9, around 60 trading partners — including the European Union, Japan and China — are set to face even higher rates tailored to each economy.
Already, Trump’s sharp 34-percent tariff on Chinese goods, set to kick in next week, triggered Beijing’s announcement of its own 34-percent tariff on US products from April 10.
Beijing also said it would sue the United States at the World Trade Organization (WTO) and restrict the export of rare earth elements used in high-end medical and electronics technology.
“China has been hit much harder than the USA, not even close,” Trump said in his post. “They, and many other nations, have treated us unsustainably badly.”
But other major trading partners held back as they digested the unfolding international standoff amid fears of a recession.
Stock markets in turmoil
Global markets reacted sharply. The Dow Jones Industrial Average plunged more than 2,000 points, down 5.5%, while the S&P 500 dropped nearly 6%, marking its worst week since the 2020 COVID crash.
The Nasdaq Composite fell 5.8%, officially entering bear market territory. Over two days, US markets lost $6.6 trillion in value, while commodity prices tumbled and investors fled to government bonds.
“This is the single biggest trade action of our lifetime,” said Kelly Ann Shaw, former White House trade adviser and now with Hogan Lovells.
Speaking at a Brookings Institution forum, Shaw described the tariffs as a “seismic and significant shift” in global trade norms.
Wall Street went into free fall Friday, following similar collapses in Asia and Europe.
Economists have also warned that the tariffs could dampen growth and fuel inflation.
However, Trump’s latest tariffs have notable exclusions. They do not stack onto recently imposed 25-percent tariffs hitting imports of steel, aluminum and automobiles.
Also temporarily spared are copper, pharmaceuticals, semiconductors and lumber, alongside “certain critical minerals” and energy products, the White House said.
But Trump has ordered investigations into copper and lumber, which could lead to further duties soon.
He has threatened to hit other industries like pharmaceuticals and semiconductors as well, meaning any reprieve might be limited.
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Canada and Mexico are unaffected by the latest move as they already face separate duties of up to 25 percent on goods entering the United States outside a North America trade agreement.
Retaliation risk
While Trump’s staggered deadlines allow space for countries to negotiate, “if they can’t get a reprieve, they are likely to retaliate, as China already has,” Oxford Economics warned this week.
EU trade chief Maros Sefcovic said the bloc, which faces a 20-percent tariff, will act in “a calm, carefully phased, unified way” and allow time for talks.
But he said it “won’t stand idly by.”
France and Germany have said the EU could respond by imposing a tax on US technology companies.
Japan’s prime minister called for a “calm-headed” approach after Trump unveiled 24-percent tariffs on Japanese-made goods.
Meanwhile, Trump said he held a “very productive” call with Vietnam’s leader, with imports from the Southeast Asian manufacturing hub facing extraordinary 46-percent US duties.
Since returning to the presidency, Trump has hit imports from Canada and Mexico with tariffs over illegal immigration and fentanyl smuggling, and imposed an additional 20-percent rate on goods from China.
ALSO READ: Mexico and Argentina Stocks in Free Fall Amid Trump Tariff Fears
Come April 9, the added levy on Chinese products this year will reach 54 percent.
Trump’s 25-percent auto tariffs also took effect this week, and Jeep-owner Stellantis has paused production at some Canadian and Mexican assembly plants.
Trump’s new global levies mark “the most sweeping tariff hike since the Smoot-Hawley Tariff Act, the 1930 law best remembered for triggering a global trade war and deepening the Great Depression,” said the Center for Strategic and International Studies (CSIS).
Oxford Economics estimates the action will push the average effective US tariff rate to 24 percent, “higher even than those seen in the 1930s.”
US customs start collecting 10% tariffs
Under the new tariff regime, which came into effect at midnight Saturday (0401 GMT), US customs agents began collecting a baseline 10% tariff on most imports, sparing only Canada and Mexico.
A bulletin issued by US Customs and Border Protection indicated a 51-day grace period for goods already in transit before the deadline, provided they arrive before 27 May.
The White House justified the tariffs by citing trade imbalances, unfair tax policies abroad, and national security concerns.
Over 1,000 product categories—valued at approximately $645 billion in 2024—have been exempted, including crude oil, pharmaceuticals, semiconductors, and lumber.
However, these unilateral moves have prompted swift and forceful responses from trading partners.
Beijing also imposed export restrictions on rare earth elements critical to high-tech and medical industries and added 11 US companies to its “unreliable entity” list.
“The market has spoken,” Chinese Foreign Ministry spokesperson Guo Jiakun wrote on Facebook, referencing a massive US stock market drop.
“The trade and tariff war started by the US against the world is unprovoked and unjustified.” Guo called for “equal-footed consultation” to resolve the conflict.
Global fallout
According to a report by Systematix Research, the steepest increases in US tariffs target emerging economies in Southeast Asia, Eastern Europe, and the Middle East.
The European Union was also caught in the crossfire. Brussels confirmed that US tariffs of 20 percent on EU imports will take effect from 9 April.
In a post on X (formerly Twitter), EU Trade Commissioner Maros Sefcovic said he held “a frank 2h exchange” with US officials, stressing that the tariffs were “damaging and unjustified.”
He added, “The EU is committed to meaningful negotiations but also prepared to defend our interests.”
The EU is currently divided on its response, including whether to invoke its ‘Anti-Coercion Instrument’—a mechanism allowing the bloc to retaliate against economic coercion from third countries.
