By Jeff Mason, David Ljunggren, and Andy Sullivan
WASHINGTON/OTTAWA — On Thursday, nations across the globe warned of escalating a trade conflict with the United States following President Donald Trump’s imposition of extensive tariffs. This move sparked concerns about significant cost hikes within the global economy’s biggest marketplace.
The sanctions unveiled by Trump on Wednesday caused a sharp decline in global financial markets and garnered criticism from various leaders who are grappling with the conclusion of an extended period of trade liberalization.
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."
The U.S. tariffs would represent the most significant trade barriers in over a hundred years: a base tariff of 10% on every import, coupled with increased specific duties on several of the nation’s largest trading partners.
This might increase prices for American buyers on products ranging from marijuana to running shoes to Apple’s iPhone. If Apple chooses to pass these additional costs onto customers, a top-tier iPhone could potentially retail for close to $2,300, according to estimates from Rosenblatt Securities.
Companies hurried to adapt. Stellantis, an automaker, announced temporary layoffs for American employees and planned to shut down facilities in both Canada and Mexico, whereas General Motors stated it would boost manufacturing output in the U.S.
The Canadian Prime Minister, Mark Carney, stated that the United States has forsaken its traditional position as a promoter of global economic collaboration.
"The global economy has fundamentally changed from what it was previously," he stated while announcing a restricted set of countermeasures.
In another development, China pledged to retaliate against Trump's 54% duties imposed on goods imported from the second-largest global economy. Similarly, the European Union announced it would respond with a 20% tariff.
The French President, Emmanuel Macron, urged European nations to halt investments in the United States.
Other trading partners such as South Korea, Mexico, and India stated they would wait for now while seeking additional concessions.
Washington's associates and competitors all cautioned about a severe impact on international commerce.
Kristalina Georgieva, the IMF Managing Director, stated that these tariffs "undoubtedly pose a substantial threat to the worldwide economic forecast, particularly when growth remains weak."
"It is crucial to steer clear of actions that might exacerbate damage to the global economy. We urge both the United States and its trading allies to collaborate productively in easing trade disputes and diminishing uncertainties," stated Georgieva.
U.S. Commerce Secretary Howard Lutnick and top trade advisor Peter Navarro stated on Thursday during appearances on cable news shows that the president remains resolute and that the tariff hikes are not part of any ongoing negotiations.
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."
Shares experienced a worldwide downturn, with experts cautioning that the tariffs might disrupt international supply chains and negatively impact company earnings.
The Dow dropped almost 4%, marking its largest single-day decline since June 2020. The S&P 500 shed close to 5%, while the technology-focused Nasdaq decreased by about 6%, experiencing its most substantial drop in percent terms since the early days of the pandemic in March 2020.
US corporations heavily involved in international manufacturing faced losses. Nike’s stock dropped by 14%, and Apple saw a decline of 9%.
Trump says the "reciprocal" tariffs are a response to barriers put on U.S. goods, while administration officials said the tariffs would create manufacturing jobs at home and open up export markets abroad, though they cautioned it would take time to see results.
In an interview with Newsmax, Vice President JD Vance criticized his detractors for adopting a shortsighted perspective.
"Fundamentally, this is all about safeguarding our nation’s security through the production and creation of essential goods ranging from steel to pharmaceuticals," Vance stated.
After his return to the White House in January, President Trump’s fluctuating tariff warnings have unsettled both consumers and businesses. He might retreat once more since the retaliatory tariffs aren’t scheduled to go into effect until April 9th.
"It seems this tariff plan wasn’t thoroughly considered. Being a complex field, trade talks require substantial groundwork, yet we believe these suggestions lack seriousness as they stand and wouldn’t form a solid foundation for discussions with any nation," stated James Lucier, who is a co-founder of Capital Alpha.
Experts warn that these tariffs might trigger another wave of inflation, increase the chance of an economic downturn in the US, and add hundreds or even thousands of dollars more to each typical American household’s expenses.
Experts suggested that these tariffs might estrange partners in Asia as well as hinder strategic initiatives aimed at containing China.
Trump has slapped a 24% tariff on Japan and a 25% tariff on South Korea, both home to major U.S. military bases. He also hit Taiwan with a 32% tariff as the island faces increased military pressure from China.
The United States' major trade allies, Canada and Mexico, did not encounter specific tariff increases on Wednesday. However, these countries are already subjected to 25% duties on numerous products and will now confront additional tariffs exclusively for vehicle imports.
(Reported by various newsrooms; written by Andy Sullivan and Daniel Trotta; Edited by Sharon Singleton, Alistair Bell, and Nia Williams)