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Donald Trump launched a new assault on the global trading order on Wednesday, imposing a barrage of new tariffs including on all US imports in a move that sent Wall Street stock futures tumbling.
The president said a levy of 10 per cent would apply to nearly all US imports from April 5 as he also revealed additional so-called reciprocal duties, meaning total tariffs as high as 20 per cent on the EU and 24 per cent on Japan will go into effect on April 9.
US tariffs on China, the world’s biggest exporter of goods, will rise to 54 per cent after Trump imposes a further 34 per cent duty on top of 20 per cent levies he placed on the Asian nation earlier this year. That could rise significantly if the US follows through on levies targeting buyers of Venezuelan oil.
Trump’s announcement sent US stock-index futures sliding, with contracts tracking the S&P 500 down 3.3 per cent and those following the tech-heavy Nasdaq 100 down 4.2 per cent in early Asia trade on Thursday.
The declines come after the blue-chip S&P 500 dropped almost 5 per cent in the first three months of the year on fears Trump’s tariffs will slow economic growth and set off a new bout of higher inflation.
Trump billed the new taxes on goods entering the US as way to “liberate” the economy, raise money for the federal government to pay for tax cuts and spark a resurgence in domestic manufacturing.
“In the face of unrelenting economic warfare, the United States can no longer continue with the policy of unilateral economic surrender,” Trump said to an outdoor audience at the White House.
“We have to take care of our people, and we’re going to take care of our people first.”
But investors and analysts said the tariffs would upend supply chains and send shockwaves through corporate America. They have also warned that levies could sharply increase US consumer prices and slow growth.
“This is close to the worst case that the market feared,” said Ajay Rajadhyaksha, global chair of research at Barclays. “This will cause damage.”
American corporate behemoths including Apple, Walmart, Amazon and Nvidia sustained heavy losses in after-hours trading on Wall Street. More than 90 per cent of shares listed on the blue-chip S&P 500 were down in extended trading, according to FactSet data.
Gold, which has risen sharply this year as investors have sought shelter in havens, rose 0.7 per cent to a new record high of $3,150 a troy ounce.
Trading volumes are typically thin in the Asia morning, which can exacerbate the scale of share price movements.
The announcements from Trump during what he billed as “liberation day” will escalate trade frictions that have been building since he won November’s election on a populist agenda of economic protectionism.
Analysts said US trading partners would have little option but to retaliate against Trump’s measures, raising the prospect of an economically damaging global trade war.
“‘Retaliation day’ will follow ‘liberation day’”, said Luca Paolini, chief strategist at Pictet Asset Management.
“Governments will look weak if they don’t hit back, he added, but expected them to “leave the door open” to negotiation. The broad-based tariffs increased the chances of a US recession, he said.
Some items would be exempt from the reciprocal tariffs, according to the White House, including energy and minerals not available in the US, as well as bullion and some goods Trump has put other duties on already.
Those include steel and aluminium, along with cars, and imports that Trump has signalled he will apply a separate set of tariffs to, including copper, pharmaceuticals, computer chips and lumber.
Mexico and Canada — trading partners Trump has repeatedly attacked in recent weeks — were also spared from the universal tariff. Goods from the two countries that comply with the 2020 trade deal they signed with the US would remain exempt from tariffs.
“It’s bad news for the world, especially the countries that got tariffs, but it’s good news for Mexico,” said Gabriela Siller, head of financial and economic research at Banco Base. “Mexico could end up winning market share despite Trump’s protectionist rhetoric.”
Reporting by Aime Williams, James Politi, Steff Chávez and Alex Rogers in Washington, Harriet Clarfelt in New York and Ian Smith in London
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