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As he had vowed, US President Donald Trump slapped reciprocal tariffs on over 180 countries. The US has imposed a 10% blanker tariff on all imports while charging higher rates for other countries.
“We will charge them approximately half of what they are and have been charging us,” said Trump speaking at the Rose Garden at the White House. While arriving at the tariffs, the US looked at actual tariffs imposed by these countries along with non-trade barriers and currency manipulation.
Trump Announces Massive Reciprocal Tariffs
The tariffs wary by countries and are quite substantial. China for instance has been slapped with a 34% tariff which is over and above the 20% tariff that Trump has already announced. Thereby, Chinese goods coming into the US would no attract a 54% levy which is not very different from the 60% tariff that Trump vowed in his election campaign.
Several countries have reacted to Trump’s announcement. China has vowed to retaliate and a commerce industry spokesperson said, “The U.S. has drawn the so-called ‘reciprocal tariffs’ based on subjective and unilateral assessments, which goes against international trade rules and seriously undermine the legitimate rights and interests of relevant parties.”
India, which apparently escaped with relatively softer levies, said that it is “carefully examining the implications” of the tariffs.
Germany Calls for a United Response from Europe
Germany has meanwhile called for a united response form Europe. German economy minister Robert Habeck said “That is what I see, that Donald Trump will buckle under pressure, that he corrects his announcements under pressure, but the logical consequence is that he then also needs to feel the pressure.”
He added, “And this pressure now needs to be unfolded, from Germany, from Europe in the alliance with other countries, and then we will see who is the stronger one in this arm wrestle.”
How Wall Street Analysts Reacted to Trump’s Tariffs
The tariffs are far worse than what markets were expecting especially in recent days Trump dropped hints that he would be lenient while announcing them.
“We would characterize this slate of tariffs as ‘worse than the worst case scenario’ the Street was fearing,” said Wedbush Securities’ Dan Ives. He added, “While there are many details to be worked out and investors will focus on the specifics over the coming 24 hours, the jaw dropper was the China reciprocal tariff of 34%. Taiwan at 32% is the other major one along with the EU at 20%.”
Art Hogan, chief market strategist at B. Riley Wealth Management also echoed similar views and said, “What was delivered was as haphazard as anything this administration has done to date, and the level of complication on top of the ultimate level of new tariffs is worse than had been feared and not yet priced into the market.”
US Stocks Crash Following Reciprocal Tariffs
Meanwhile, US stocks are plummeting today after the wide-ranging tariffs. Citi has advised investors to shun risk assets amid rising fears of a trade war. “Effectively, we don’t want to be adding to risk right now. If you have a portfolio that is fully invested, we’re going to sit tight and think about being a medium- and long-term investor. But if you have cash that you were looking to deploy, the uncertainty factor — whether it’s in bonds or in equities — is too great for us to have a really convicted call,” said, Kate Moore, chief investment officer at Citi Wealth speaking with CNBC
Analysts Have Raised Odds of a US Recession
Surveys have shown increasing odds of a US recession amid uncertainty over President Donald Trump’s tariffs. In the quarterly CNBC CFO Council Survey, the majority of chief financial officers said that they expect the US economy to enter a recession in the back half of 2025. Overall, 60% of CEOs in that survey said that they see a recession in the second half of 2025 while another 15% predict one next year.
The majority of respondents said that they were “somewhat pessimistic about the overall state of the U.S. economy.” However, CFOs don’t see a major slowdown on the horizon and 50% believe the recession would be “moderate” and another 40% see it as “mild.”
Notably, 30% of respondents listed Trump’s trade policy as the primary reason for the new economic downturn base case.
Separately a Deutsche Bank survey shows a nearly 50-50 chance of a recession. UCLA Anderson Forecast has also recently issued its first-ever recession watch amid concerns over Trump’s policies.
Will Trump Try to Support Markets?
Fundstrat’s Tom Lee believes that Trump will try to calm markets after his tariffs trigger a meltdown. “Investor perceptions of Trump differ significantly between bond and stock markets, possibly due to political affiliations within these groups. Notably, bond markets lean Republican, whereas stock markets — and even more intensely hedge funds — lean Democratic,” said Lee.
He added, “This division could explain the differential reactions to tariff-related news between these markets.”
Meanwhile, US stocks are plummeting today with companies like Apple and Nike which source the bulk of their goods from overseas being the worst performers in premarkets.
Companies would now need to come up with ways to deal with their tariffs which can be through absorbing the costs or to pass the higher tariffs, either in full or part. Reuters reported that Ford would offer employee pricing on several models to all customers thereby absorbing the higher costs from Trump’s tariffs.
