President Donald Trump’s aggressive tariffs have raised global concerns and sparked threats of retaliation from key allies. Experts warn that these tariffs, ranging from 10% to 49%, could push the U.S. and other nations into a recession. This major decision could also become a global trade war, significantly impacting the U.S. economy.
On Wednesday, Trump announced a 34% “reciprocal” tariff on top of the existing 20% duties on all goods imported from China. In response, China vowed to take action against Trump’s 54% tariffs. The European Union also opposed the move, facing a 20% duty. Meanwhile, South Korea, Mexico, India, and other trade partners chose to negotiate better terms before the tariffs took effect on April 9.
Understanding Trump’s New Tariffs
President Donald Trump’s new tariff plan will affect over 180 countries on April 2. Some tariffs start at 10%, while others exceed 90%.
The Trump administration’s new tariffs could significantly impact tech companies that depend on a global supply chain. One company affected by these changes is Nvidia, a leading producer of graphics processing units (GPUs) and a key player in artificial intelligence (AI).
Nvidia is based in California but relies on companies in other countries to manufacture its products. The company designs its chips in California but outsources production to Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung.
The bad news for Nvidia is that the new tariffs include a 32% tariff on imports from Taiwan and a 34% tariff from China, two key suppliers. However, the good news is that semiconductors, essential for Nvidia’s GPUs and AI chips, are mostly exempt from these new tariffs.
These tariffs will also significantly impact other products and services. Key targets include China, Taiwan, and South Korea, major exporters of electronics like iPhones and TVs. Most iPhones are still made in China, though Apple has moved some production to India. However, according to the Trump administration, India will also face a 26% tariff.
Most clothes and shoes sold in US stores like Walmart and Target come from other countries such as China, Vietnam, and Bangladesh. The Trump administration has also announced new tariffs on these nations. China will face a 34% tariff in addition to the existing 20% tariff, Vietnam 46%, and Bangladesh 37%. In addition, the Island of Sri Lanka is also exporting branded clothes to the US, and the prices of branded clothing will increase in the US because the country also faces 44% higher tariffs.
Moreover, according to the USDA, the US gets about 80% of its coffee beans from Latin America, mainly Brazil and Colombia. Under Trump’s new trade policy, both countries will face a 10% tariff.
Chocolate is another key import since the US climate isn’t suitable for growing cocoa beans. Its major suppliers include Côte d’Ivoire and Ecuador, but new tariffs will be 21% for Côte d’Ivoire and 10% for Ecuador.
Global Reactions and Retaliations
EU
European Commission President Ursula von der Leyen strongly criticized the new 20% tariff on the European Union, saying it would seriously harm the global economy.
She warned that the impact would be severe for millions of people worldwide, as prices for basic needs like food, transportation, and medicine would rise. She also stressed that the most vulnerable members of society would suffer the most.
CHINA
After facing a new 34% tariff, China’s Ministry of Commerce said it would “resolutely take countermeasures to safeguard its own rights and interests.” However, it didn’t give details on how it plans to respond. The ministry urged the U.S. to cancel its one-sided tariff decisions and resolve trade disputes through fair talks with its partners.
Apart from that, China expert Bill Bishop warned that Beijing could react quickly. He said China might tighten controls on key mineral exports and increase pressure on U.S. companies. He also suggested China could sharply weaken its currency to reduce the impact of the tariffs.
MEXICO
Mexico’s economic minister, Marcelo Ebrard, welcomed the “preferential treatment” his country received after President Donald Trump announced new global tariffs. While the U.S. introduced a 10% baseline tariff on imports, Mexico and Canada were not included in the latest round. Although earlier tariffs still apply, Trump chose to exempt both countries from the new charges.
Mexican President Claudia Sheinbaum said the U.S. gave Mexico special treatment because of both countries’ strong and positive relationship.
He said at a press conference on Thursday morning, “There are no additional tariffs on Mexico, and that is good for the country.”
“President Sheinbaum’s strategy has worked. We have a preferential treatment,” Ebrard said at the same press conference. However, President Donald J. Trump had previously implemented a 25% additional tariff on imports from Mexico.
CANADA
Canada’s government warned that new U.S. tariffs would hurt both American and Canadian workers and businesses. Prime Minister Mark Carney said Canada will respond strongly to protect its economy and support its people.
To defend Canadian jobs and industries, the government will take the following actions:
- Add a 25% tariff on fully assembled vehicles from the U.S. that don’t meet CUSMA (Canada-United States-Mexico Agreement) rules.
- Apply another 25% tariff on U.S. cars that qualify under CUSMA but contain parts not made in Canada or Mexico.
- Create a new plan to encourage carmakers to invest in and build more vehicles in Canada.
Carney also promised that every dollar raised through these tariffs would help Canadian auto workers directly.
These new steps build on earlier support programs, including:
- Waiving the one-week wait for employment insurance (EI).
- Suspending rules that normally require people to use up their severance pay before collecting EI.
- Making it easier to get EI by adjusting the regional unemployment rates.
- Letting businesses delay income tax and GST/HST payments until June 30, 2025, giving them access to up to $40 billion in cash.
- Offering new funding and financing tools to help businesses.
- Boosting support for regional development agencies so they can assist local businesses more effectively.
Carney also said that in times like this, Canada must stay united and respond with determination, and that’s precisely what they’re doing. However, according to the new tariffs list on Thursday, the US government was not considering Canada’s imports; previously, they imposed an additional 25% on all imports from Canada.
UK
The UK handled the situation carefully, stating that despite a new 10 percent tariff on British goods, the US remains its “closest ally.”
Jonathan Reynolds, the Secretary of State for Business and Trade, explained that the UK aims for a trade deal to reduce the effects of the new tariff. He emphasized, “Nobody wants a trade war, and our intention remains to secure a deal.” He added, “But nothing is off the table, and the government will do everything necessary to defend the UK’s national interest.”
JAPAN
On Thursday, Japanese Prime Minister Shigeru Ishiba expressed disappointment that Japan didn’t receive an exemption from President Donald Trump’s new tariffs. He also said the government would take steps to support local industries affected by the decision.
While Japan didn’t mention any plans for retaliation, its officials questioned whether the tariffs followed World Trade Organization rules and raised doubts about the accuracy of some U.S. claims regarding Japan’s tariffs.
“We had been requesting that the U.S. government review its unilateral tariff measures at various levels, and we are extremely disappointed and regret that such measures have been implemented nonetheless,” Ishiba told reporters.
SOUTH KOREA
South Korea’s acting president, Han Duck-soo, urged talks with US officials to protect the export-driven economy from the impact of the 25% tariff. He also ordered emergency support for affected businesses.
According to a ministry statement, Han instructed the industry minister to study the details of the tariffs and actively negotiate with Washington to reduce their impact.
“As the global trade war has become a reality, the government must pour all its capabilities to overcome the trade crisis,” Han said.
INDIA
India described President Donald Trump’s decision to impose 26% tariffs as a “mixed bag,” not a significant setback. On Thursday, a senior official from the commerce ministry said they are reviewing the impact of these new tariffs.
The official explained that the US will apply a general 10% tariff on all imports starting April 5. An extra 16% will be added from April 10, making the total tariff on goods from India 26%.
SRI LANKA
Sri Lanka’s apparel industry has warned that new US tariffs could severely impact the country’s top export sector and threaten thousands of jobs.
However, Deputy Economic Development Minister Anil Jayantha said Sri Lanka is looking for ways to negotiate with the Trump administration to lower the 44% reciprocal tariff before it takes effect on April 9.
“Sri Lanka has already discussed the issue with the US. The new tariff will take effect on April 9, but the government is working to negotiate a reduction, considering the country’s unique situation.” Deputy Minister Jayantha said in the media on Thursday.
Economic Implications of the Trade War
President Donald Trump’s announcement of broad new tariffs has sparked global backlash and fears of a growing trade war. Countries worldwide have warned they may respond with their trade measures, raising concerns about rising prices in the U.S., the world’s largest consumer market.
Economists warn that the tariffs may raise the cost of living as businesses pass higher import costs to consumers, possibly driving inflation. However, they also suggest that tariffs could slow economic growth, reduce demand, and lower prices. Another risk is “stagflation,” where the economy struggles to grow while inflation remains high. Experts also warn that potential tariffs on Canada, China, and Mexico could put U.S. jobs at risk, especially for autoworkers, farmers, and alcohol distillers.
Moreover, U.S. stock markets saw their worst drop since the 2020 COVID-19 crash after President Donald Trump announced significant tariffs on foreign goods. Wall Street lost over $2 trillion in market value on Thursday as investor fears grew. The S&P 500 fell by 4.8%, the Dow Jones dropped more than 1,600 points (about 4%), and the Nasdaq sank 6%. The sharp declines shook investor confidence and raised worries about a possible recession.
In addition, stock prices fell across Europe and Asia. As a result, the FTSE 100 in London lost 1.5%, Germany’s DAX dropped 2.3%, and France’s CAC declined 2.5%.
At the same time, the U.S. dollar weakened, falling nearly 2% against several major currencies. The British pound, for example, rose to $1.3148. Also, Deutsche Bank warned investors to watch for a possible “confidence crisis” in the U.S. dollar.
Political and Geopolitical Consequences
President Trump’s back-and-forth tariff threats against Canada and Mexico and his remarks about making Canada the 51st state have unsettled markets and created uncertainty. These actions have delayed investments, weakened trust between allies, and raised doubts about North America’s economic unity. As a result, both Canada and Mexico are rethinking their deep economic ties with the U.S. This could lead to weaker cooperation within North America, potentially harming U.S. economic and national security while benefiting its rivals.
The North American trade partnership began with the 1988 U.S.-Canada Free Trade Agreement, expanded through NAFTA, and was later updated under the USMCA. These agreements aimed to make North America the world’s most competitive and prosperous region. Since NAFTA, trade between the U.S., Canada, and Mexico has tripled. 2024 U.S. trade with Mexico reached about $840 billion, while trade with Canada totaled around $762 billion.
Together, this $1.6 trillion trade bloc accounts for nearly 30% of global GDP, larger than China’s share and almost double that of the European Union. Strong trade rules, integrated supply chains, and growing cultural ties helped build a sense of shared progress among the three nations.
However, President Trump’s trade policies threaten to undo decades of cooperation and economic growth. His actions have already led Mexico and Canada to reconsider their reliance on U.S. trade. Both countries are exploring new markets, and Canada is looking into building new infrastructure to expand trade beyond North America. While deep business ties and consumer demand will keep trade flowing, a shift is beginning.
On March 27, after the U.S. announced a 25% tariff on imported cars starting April 2, Canadian Prime Minister Mark Carney declared that Canada’s long-standing economic and security relationship with the U.S. was over. This signals a possible shift away from North American economic integration.
Also, around 8 million people in the U.S. work in areas that could face new tariffs. Most of these workers have supported Donald Trump in past elections. However, if prices go up because of these tariffs, many might feel the impact of higher living costs, which could lead some to rethink their support for the Trump administration.
Canada Looks to Strengthen Trade Ties with the EU Amid U.S. Tariff Concerns
Canada wants to grow its trade relationship with the European Union and protect global trade rules. Trade Minister Mary Ng shared this during an interview on Saturday.
Since 2017, Canada and the EU have followed a free trade agreement that increased their trade by 65%. In 2021, they also agreed to work together on raw materials.
On Saturday, Ng had lunch with Maros Sefcovic, the EU trade lead. The day before, she met with Ngozi Okonjo-Iweala, the head of the World Trade Organization, in Geneva.
There, Ng said Canada will keep working with partners like the EU and the WTO to support fair and open trade, especially now that the U.S. brought new tariffs.
Conclusion
The global trade war started by Trump’s tariffs is causing tension between the U.S. and major trading partners. Countries like China, Canada, and the EU are reacting strongly, warning of serious economic consequences. This trade war could raise prices, hurt global trade, and push some economies toward recession or job losses. The ongoing trade war may deeply damage worldwide trade relations and economic stability if not resolved soon.
