Trump's tariff

4 Apr

Global tensions are rising as Trump defends his tariffs, markets are wavering.

WASHINGTON/OTTAWA/TOKYO, April 4, ( Reuters ) – President Trump's radical new tariffs have sparked a global reaction and heightened fears of a recession, as countries promise retaliation and financial markets collapse.

On Wednesday, he announced a bold tariff package including a base duty of 10% on all imports and significantly higher rates for dozens of countries, potentially establishing the highest trade barriers in over a century. Trump defended this measure, calling the tariffs a “great bargaining chip,” although his administration has sent mixed signals regarding their permanence or use as a negotiating tool.

The consequences were immediate. Global stocks fell, with the Japanese Nikkei experiencing its worst week in years as bank values collapsed. American markets were also hit—the Dow lost nearly 4%, the S&P 500 dropped nearly 5%, and the Nasdaq slid nearly 6%, its worst daily performance since March 2020. Multinationals were particularly affected, with Apple losing 9% and Nike collapsing by 14%.

JP Morgan has significantly raised its recession forecasts, now seeing a 60% probability of a global slowdown by the end of the year, up from 40% previously. Analysts have warned that these rates could reignite inflation, disrupt supply chains, and add thousands of dollars to American household expenses.

The international response has been fierce. Canada and the European Union have pledged to retaliate, with Canadian Prime Minister Mark Carney accusing the United States of abandoning its leadership role in global trade. China, facing a 54% tariff, has also promised reprisals, while French President Emmanuel Macron has urged EU countries to suspend their investments in the United States.

Japan, a key American ally, has described this measure as a “national crisis.” Prime Minister Shigeru Ishiba expressed his concern as the country's markets wavered. Bond yields plummeted, with investors betting that the Bank of Japan might delay its rate hike plans. South Korea, India, and Mexico have indicated that they will suspend their retaliations—for now—seeking clarifications or concessions.

Even allies have not been spared. Trump imposed tariffs of 24% on Japan, 25% on South Korea, and 32% on Taiwan, despite the presence of major U.S. military bases in these three countries facing regional tensions with China.

In the United States, companies rushed to respond. Automaker Stellantis announced temporary layoffs and plant closures in Canada and Mexico, while General Motors stated that it would increase its domestic production. Some companies warned that the cost of everyday goods, from cannabis to electronics, would rise sharply. A high-end iPhone could exceed $2,300 if Apple passes on the additional costs, according to Rosenblatt Securities.

I watch with concern this commercial escalation which seems to me more motivated by electoral considerations than by a genuine economic strategy. These measures risk plunging us into a spiral of reprisals from which no one will emerge as a winner.