Summary
If you’re just joining us, here’s a rundown of the latest developments:
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US President Donald Trump has unveiled sweeping tariffs on some of the country’s largest trading partners. Trump said he would impose a 10% universal tariff on all imported foreign goods in addition to “reciprocal tariffs” ranging from 20% to more than 40% on dozens of countries.
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China was hit with a 34% fee, in addition to a 20% tariff on all Chinese imports already in place, while the EU will now be levied at 20% and Japan at 24%. Trump said America had been “looted, pillaged and raped” by its trading partners: “In many cases, the friend is worse than the foe.”
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The 10% universal tariff will go into effect on 5 April while the reciprocal tariffs will begin on 9 April.
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Stocks dived after the announcement, with technology shares particularly hard hit, while the price of gold hit a record high as investors scrambled for safety. Japan’s Nikkei was down 2.8% on opening, Hong Kong’s Hang Seng Index slid 1.6%, South Korea’s Kospi fell 2% and Australian shares fell 2%.
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US tariffs are a “major blow” to the world economy and the EU is preparing counter measures that will apply if negotiations fail, EU Commission chief Ursula von der Leyen has said. “The global economy will massively suffer, uncertainty will spiral and trigger the rise of further protectionism,” she said.
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China’s commerce ministry called for Washington to “immediately cancel” the new tariffs, warning they “endanger global economic development” and would hurt US interests and international supply chains. It called for dialogue and added: “There is no winner in a trade war, and there is no way out for protectionism.”
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War-torn and economically struggling countries are among those facing the highest tariffs. Myanmar, which is in the middle of a civil war and which was hit by an earthquake last week, was hit with a rate of 44%, while Sri Lanka is facing a 44% tariff and Lesotho a rate of 50%.
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The tariffs also hit the Heard Island and McDonald Islands, a group of barren, uninhabited volcanic islands near Antarctica, which form an external territory of Australia, as well as Norfol Island, which said it had no known exports to the US. Albanese said on Thursday: “Norfolk Island has got a 29% tariff. I’m not quite sure that Norfolk Island, with respect to it, is a trade competitor with the giant economy of the United States, but that just shows and exemplifies the fact that nowhere on earth is safe from this.”
Key events
European stock markets are set to join the global selloff in around 20 minutes when trading opens.
The futures markets are indicating that the EuroSTOXX50, which tracks the largest fifty listed companies in the eurozone, will drop around 1.8%.
Shares are also forecast to slide in London, where FTSE 100 futures are currently down around 1%.
Wall Street is also heading for a chilly bath – S&P 500 futures were down 3% last night.
The mood is highly anxious, as Susannah Streeter, head of money and markets at Hargreaves Lansdown, reports:
‘’A brutal round of trade top Trumps is sending a shiver through global markets. As threats have turned into facts, the plan for blanket tariffs on US trading partners has unnerved investors. As Trump has ripped up trade norms, it’s spread fresh worries about the implication for the global economy. Futures trades indicate a sharp fall for the S&P 500 with other indices around the world looking set to follow suit.
A baseline 10% tariff is the starting point, with 20% tariffs set to land on imports from the EU, and much steeper duties imposed on countries in Asia with China facing 34% duties. There will also be 25% tariffs slapped on foreign made cars sold in the US.
Jonathan Reynolds: tariffs are a disappointment
British business minister Jonathan Reynolds has warned the tariffs announced by Donald Trump last night is a threat to the UK, because of the damage it will cause to global trade.
Speaking to Times Radio this morning, Reynolds explained that anything that disrupts the global trading system is a threat to the UK.
And even though the UK was hit with a smaller tariff than many other countries – 10%, rather than the EU’s 20% – Reynolds said he was “disappointed” to be tariffed at all.
He said:
Any barrier to trade, particularly between the UK and our major trading partner, which the US is, is a disappointment to me. It’s a challenge.
“So, I recognise that the UK is in a better position than a lot of other countries from what was announced last night, but I was still disappointed.”
Reynolds said the UK should ignore calls to trigger a larger trade war by retaliating. Instead, he said the British government woud stay calm and to talk to the US, and continue the work towards reaching an economic deal.
Pound hits $1.31 as dollar weakens
With the dollar sliding on the international markets, the British pound has hit its highest since last October.
Sterling has gained almost one cent so far today, touching $1.31 for the first time since last October.
The euro is up almost a cent too, at $1.095, as the dollar suffers a post-Liberation Day hangover.
Michael Brown, senior research strategist at Pepperstone, says financial market participants “view the dollar not as a haven, but as the asset most exposed to the utter incoherence and nonsense emanating from the White House.”
Norway – which is not an EU member – has said it will seek to negotiate with the US regarding the 15% tariff imposed on it.
“This is bad news, it is very serious,” prime minister Jonas Gahr Støere told public broadcaster NRK. He added:
There is an opening for negotiations here, the Americans say, and we will use that in every possible way that we can.
António Costa, president of the European Council, has said the EU will remain a “staunch advocate for free and fair trade” and urged the bloc to move forward with trade deals with South America, Mexico and India. In a post on X he said:
Trade is a powerful engine of global prosperity. The EU will remain a staunch advocate for free and fair trade.
We will engage with all our partners and continue to strengthen and expand our trade network. Now is the time to move forward with the agreements with #Mercosur, #Mexico and decisively advance in the negotiations with #India and other key partners.
Thailand, which was hit with tariffs of 36%, has said its exporters should seek new markets, adding that it had prepared “mitigation measures” to support those who rely mainly on the US.
The US is the country’s largest export market, with the country exporting electronics, machinery and agricultural goods.
In its statement, the Thai government said it understood the US’s wish to “rebalance trade relationships” and that it had “expressed its readiness to engage in dialogue with the United States at the earliest opportunity to achieve a fair trade balance”.
Summary
If you’re just joining us, here’s a rundown of the latest developments:
-
US President Donald Trump has unveiled sweeping tariffs on some of the country’s largest trading partners. Trump said he would impose a 10% universal tariff on all imported foreign goods in addition to “reciprocal tariffs” ranging from 20% to more than 40% on dozens of countries.
-
China was hit with a 34% fee, in addition to a 20% tariff on all Chinese imports already in place, while the EU will now be levied at 20% and Japan at 24%. Trump said America had been “looted, pillaged and raped” by its trading partners: “In many cases, the friend is worse than the foe.”
-
The 10% universal tariff will go into effect on 5 April while the reciprocal tariffs will begin on 9 April.
-
Stocks dived after the announcement, with technology shares particularly hard hit, while the price of gold hit a record high as investors scrambled for safety. Japan’s Nikkei was down 2.8% on opening, Hong Kong’s Hang Seng Index slid 1.6%, South Korea’s Kospi fell 2% and Australian shares fell 2%.
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US tariffs are a “major blow” to the world economy and the EU is preparing counter measures that will apply if negotiations fail, EU Commission chief Ursula von der Leyen has said. “The global economy will massively suffer, uncertainty will spiral and trigger the rise of further protectionism,” she said.
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China’s commerce ministry called for Washington to “immediately cancel” the new tariffs, warning they “endanger global economic development” and would hurt US interests and international supply chains. It called for dialogue and added: “There is no winner in a trade war, and there is no way out for protectionism.”
-
War-torn and economically struggling countries are among those facing the highest tariffs. Myanmar, which is in the middle of a civil war and which was hit by an earthquake last week, was hit with a rate of 44%, while Sri Lanka is facing a 44% tariff and Lesotho a rate of 50%.
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The tariffs also hit the Heard Island and McDonald Islands, a group of barren, uninhabited volcanic islands near Antarctica, which form an external territory of Australia, as well as Norfol Island, which said it had no known exports to the US. Albanese said on Thursday: “Norfolk Island has got a 29% tariff. I’m not quite sure that Norfolk Island, with respect to it, is a trade competitor with the giant economy of the United States, but that just shows and exemplifies the fact that nowhere on earth is safe from this.”
How did the Trump White House calculate the tariffs?
Many people have been asking how the Trump administration worked out its tariffs, while many countries have been arguing the numbers bear no relationship with reality.
New Zealand’s trade minister insisted his country did not apply a 20% tariff to US imports, as suggested by Washington, while Australia’s prime minister, Anthony Albanese, insisted the US tariffs had “no basis in logic” and that “a reciprocal tariff would be zero, not 10%.”
One journalist claims to have discovered the answer, and analysts are suggesting he is likely correct.
“They didn’t actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country’s exports to us,” financial writer James Surowiecki wrote in a post on X.
“So we have a $17.9 billion trade deficit with Indonesia. Its exports to us are $28 billion. $17.9/$28 = 64%, which Trump claims is the tariff rate Indonesia charges us.”
Then that number was divided in half as Trump said he was being “kind”. He also said the tariff calculations included “currency manipulation and trade barriers”.
An explanation of the calculations later posted on the office of the US trade representative appeared to confirm that the administration had used trade deficits divided by imports.
Mike O’Rourke, chief marketing strategist at Jones Trading, was quoted by CNN as saying:
While these new tariff measures have been framed as ‘reciprocal’ tariffs, it turns out the policy is actually one of surplus targeting …
There does not appear to have been any tariffs used in the calculation of the rate. The Trump administration is specifically targeting nations with large trade surpluses with the United States relative to their exports to the United States.
The US tariffs are “highly unreasonable” and the government plans “serious negotiations” with Washington, Taiwan has said. Cabinet spokeswoman Michelle Lee said:
The Executive Yuan found the decision highly unreasonable and deeply regretted it, and will initiate serious negotiations with the United States.
The tariffs announced on Wednesday included a 32% levy on Taiwan.
Semiconductor chips, a sector that Taiwan dominates and has been a source of friction between Washington and Taipei, were excluded from the levies.
But, analysts warned that tariffs on components would have a knock-on effect for the critical chip industry.
Taiwan had drawn up plans to help local industries hit by possible US tariffs, minister of cconomic affairs Kuo Jyh-huei said Tuesday, ahead of Trump’s announcement.
Steep US tariffs on imported automobiles have officially kicked in.
The 25% tariffs took effect at 12:01am ET (0401 GMT) on foreign-made cars and light trucks, with automobile parts to be hit no later than 3 May, according to a Federal Register notice, AFP reported.
Ursula von der Leyen says the US and the EU over the past 80 years have greatly benefited from their trading relationship, with consumers enjoying reduced prices and businesses benefiting from “huge opportunities” leading to “unprecedented growth and prosperity”.
At the same time we know that the global trading system has serious deficiencies. I agree with President Trump that others are taking unfair advantage of the current rules and I’m ready to support any efforts to make the global trading system fit for the realities of the global economy.
But I also want to be clear. Reaching for tariffs as your first and last tool will not fix it. This is why from the outset we have always been ready to negotiate with the United States to remove the remaining barriers to trans-Atlantic trade.
‘No order in the disorder’, says von der Leyen
A bit more from von der Leyen’s press conference. She said all businesses “big and small” would suffer “from day one”, affected by disruptions to supply chains and greater uncertainty as well as “burdensome bureaucracy”.
The costs of doing business with the United States will “drastically increase”, she said.
What is more there seems to be no order in the disorder. No clear path through the complexity and chaos as all US trading partners are hit.
Analysis: Liberation from what?
Callum Jones
For weeks, Donald Trump and his aides sought to brand Wednesday as “liberation day” in America. Many in the US could be forgiven for wondering what exactly they’ve just been liberated from.
Trump likes to present the world as black and white. The US is either winning or losing. A policy, deal or plan is the best or the worst. A person, country or company is supporting or screwing you.
There is rarely space for nuance, time for complexity, or tolerance for inconvenient facts. The simplicity of this narrative is its power.
By Trump’s telling, the US is about to raise trillions of dollars for the federal government by taxing the world, not its citizens: a typically black and white choice.
But reality is often more complex than rhetoric. There are myriad shades of gray.
Import tariffs are not paid by other countries. They are paid by importers – in this case, US firms and companies – buying goods from overseas. These costs often trickle down through the economy, raising prices at every clink in the chain.
Trump promised lower prices. He is betting his tariffs won’t raise them too high, for too long.
“This is going to be a big moment,” he said on Wednesday. “I think you’re going to remember today.”
He may well be right.
US tariffs a ‘major blow’ to world economy, EU preparing counter measures, von der Leyen says
US tariffs are a “major blow” to the world economy and the EU is preparing counter measures that will apply if negotiations fail, EU Commission chief Ursula von der Leyen has said.
“We are already finalising the first package of countermeasures in response to tariffs on steel,” she said in a statement read out in Uzbekistan ahead of an EU-Central Asia partnership summit.
“And we’re now preparing for further countermeasures to protect our interests and our businesses if negotiations fail.”
Trump earlier unveiled a 10% minimum tariff on most goods imported to the US with a higher 20% rate for the EU.
Von der Leyen said the consequences of the US tariffs would be “immense”.
The global economy will massively suffer, uncertainty will spiral and trigger the rise of further protectionism.
The consequences will be dire for millions of people around the globe also for the most vulnerable countries, which are now subject to some of the highest US tariffs.
Shares in Hanoi have also plunged by more than 5% after markets opened on Thursday; Trump hit Vietnam with particularly harsh tariffs of 46%.
The Hanoi Stock Exchange Equity Index sank 5.6 percent, or 13.42 points, to 224.71.
US tariffs are ‘extremely regrettable’ and will hurt US economy, Japan says
Japan’s trade minister says Tokyo told Washington that sweeping new US tariffs that include a 24% levy on Japanese imports are “extremely regrettable”, according to AFP.
“I have conveyed that the unilateral tariff measures taken by the US are extremely regrettable, and I have again strongly urged [Washington] not to apply them to Japan,” Yoji Muto told reporters, adding that he spoke with US commerce secretary Howard Lutnick before Donald Trump’s announcement.
“I also explained in detail how the US tariffs would adversely affect the US economy by undermining the capacity of Japanese companies to invest in the United States,” said Muto.
“We had a frank discussion on how to pursue cooperation in the interest of both Japan and the United States that does not rely on tariffs,” Muto said.
Chief cabinet secretary Yoshimasa Hayashi also told reporters that the tariffs may contravene World Trade Organization (WTO) rules and the two countries’ trade treaty.
“We have serious concerns as to consistency with the WTO agreement and Japan-US trade agreement,” he told reporters.
Japan has also failed to win exclusion from 25-percent tariffs on auto imports due to come into force later on Thursday.
Last year, vehicles accounted for around 28% of Japan’s 21.3 trillion yen ($142 bn) of US-bound exports, and roughly eight% of all Japanese jobs are tied to the sector.
China urges US to ‘immediately cancel’ new tariffs, calls for ‘dialogue’
China’s commerce ministry has called for Washington to “immediately cancel” sweeping new tariffs, warning they “endanger global economic development” and would hurt US interests and international supply chains.
“China urges the US to immediately cancel unilateral tariff measures and properly resolve differences with trade partners through equal dialogue,” the ministry said, adding: “There is no winner in a trade war, and there is no way out for protectionism.”
Trump has hit China with particularly stinging tariffs of 34% in addition to already existing 20% tariffs on all Chinese imports.
Beijing also accused the United States of a “typical unilateral bullying practice”.
Trump has said his tariffs are “reciprocal” but many experts say his administration’s estimates for levies placed on US imports by other countries are wildly exaggerated.
“The US claims to have suffered losses in international trade, using so-called ’reciprocity’ as an excuse to raise tariffs on all trade partners,” Beijing said.
“This approach disregards the balance of interests achieved through years of multilateral trade negotiations and ignores the fact that the US has long profited significantly from international trade,” it added.
‘Nowhere on earth is safe’: Trump imposes tariffs on uninhabited islands near Antarctica
Kate Lyons
In news you didn’t know you needed:
A group of barren, uninhabited volcanic islands near Antarctica, covered in glaciers and home to penguins, have been swept up in Donald Trump’s trade war, as the US president hit them with a 10% tariff on goods.
Heard Island and McDonald Islands, which form an external territory of Australia, are among the remotest places on earth, accessible only via a two-week boat voyage from Perth on Australia’s west coast. They are completely uninhabited, with the last visit from people believed to be nearly 10 years ago.
Nevertheless, Heard and McDonald Islands featured in a list released by the White House of countries that would have new trade tariffs imposed.
Read the full story below.
