President Donald Trump’s move to impose sweeping tariffs on US imports on allies and rivals alike sparked threats of retaliation on Thursday (Apr 3), intensifying a global trade war that threatens to stoke inflation and raising fears of recession.
The penalties announced on Wednesday unleashed turbulence across world markets and drew condemnation from other leaders facing the end of an era of trade liberalisation that has shaped the global order for decades.
Trump said he would impose a 10 per cent baseline tariff on all imports to the United States and higher duties on some of the country’s biggest trading partners.
According to Fitch Ratings, the effective US import tax rate has shot up to 22 per cent under Trump from just 2.5 per cent in 2024, reaching levels last seen around 1910.
As investors digested the news on Thursday, Asian stock markets in Beijing and Tokyo sank to multi-month lows. European shares were also down sharply in morning trade, with top goods exporter Germany hit hard.
Wall Street futures sank as investors shed riskier assets in favour of safe-haven bonds and gold.
Now facing 54 per cent tariffs on exports to the US, the world’s No 2 economy China vowed countermeasures, as did the European Union – Washington’s friends and foes united in criticism of measures they fear will deal a devastating blow to global trade.
“The consequences will be dire for millions of people around the globe,” EU chief Ursula von der Leyen said, adding the 27-member bloc was preparing to hit back if talks with Washington failed.
US Treasury Chief Scott Bessent warned earlier that any such retaliatory moves would only lead to escalation.
Among close U.S. allies, the European Union was targeted with a 20 per cent rate, Japan with 24 per cent, South Korea with 25 per cent and Taiwan with 32 per cent. Even some tiny territories and uninhabited islands in the Antarctic were hit by tariffs, according to a list posted by the White House on X.
“This is not the act of a friend,” said Prime Minister Anthony Albanese of Australia, a nation often described as America’s “deputy sheriff” in Asia. “The (Trump) administration’s tariffs have no basis in logic and they go against the basis of our two nations’ partnership.”
