Trump tariffs kick in, spurring more market carnage

Wednesday 09 April 2025 - 10:34

By: Zahouani Ilham

Trump tariffs kick in, spurring more market carnage

U.S. President Donald Trump’s sweeping tariffs on imports from dozens of countries officially took effect on Wednesday, triggering a sharp escalation in global trade tensions. Among the most significant were 104% duties on Chinese goods, a move that intensified market instability and accelerated a widespread sell-off in financial markets.

These aggressive trade measures, part of Trump’s "reciprocal" tariff strategy, have disrupted long-standing international trade norms, stoked fears of a looming recession, and wiped trillions of dollars in market value from major corporations. Since the announcement of the tariffs last week, the S&P 500 has experienced its steepest decline since the index’s inception in the 1950s, nearing bear market territory — defined by a 20% drop from recent highs.

Even traditionally safe assets like global benchmark bonds were impacted by the chaos, with panic selling shaking investor confidence. Stock futures in the U.S. and Europe forecast further losses following a difficult day in Asian markets, though Chinese equities managed modest gains due to government interventions.

Despite the market upheaval, Trump has downplayed the consequences, suggesting the tariffs are pressuring foreign leaders to engage in negotiations. While he has labeled the tariffs "permanent," he has also claimed they are driving countries toward new trade deals. “A lot of countries are now coming to the table,” Trump stated during a White House event, adding later that he anticipates China will also seek a deal.

The administration has scheduled trade talks with key partners including South Korea, Japan, and Italy. Additionally, Vietnam’s deputy prime minister will meet with Treasury Secretary Scott Bessent to discuss the impact of tariffs — particularly burdensome for Vietnam, a major hub for low-cost manufacturing.

Although markets briefly rose earlier Tuesday on optimism about possible deals, U.S. stocks ultimately fell by the close of trading. German Finance Minister Joerg Kukies warned that the escalating trade conflict could push Europe’s largest economy into another recession. JP Morgan estimates a 60% chance the global economy could slide into recession by the end of the year.

In response to Trump’s tariffs, China has doubled down. After the U.S. nearly doubled tariffs from 54% to 104% on Chinese goods, Beijing condemned the move and vowed firm countermeasures. Chinese leaders are reportedly planning urgent meetings to implement policies that could stabilize the economy and markets.

Foreign Ministry spokesperson Lin Jian criticized the U.S. for its “bullying tactics,” vowing China would not yield to pressure. Meanwhile, other nations have responded with emergency relief measures to protect key industries. South Korea rolled out support for its automotive sector, and central banks in New Zealand and India cut interest rates to shield their economies.

Economists caution, however, that American consumers may ultimately face the greatest burden from the ongoing tariff war.