Global Economic Crisis Looms as Trump Imposes Tariffs
Global Market Rout Deepens
As the global market continues to plummet, US President Donald Trump has cautioned against "stupid" panic, stating that world leaders are "dying to make a deal". However, the stock market is still reeling from the effects of Trump’s tariffs offensive, with shares in New York joining the slump and all three major US indices falling more than 3% in early trading.
Tariffs Take Effect
A 10% "baseline" tariff on imports from around the world took effect on Saturday, with a slew of countries set to be hit by higher duties from Wednesday. Levies of 34% for Chinese goods and 20% for EU products have sparked concerns about the impact on global trade.
Trump’s Reaction
Minutes before the markets opened in New York, Trump posted on social media that his tariff reforms were "a chance to do something that should have been done decades ago". He urged his followers to "Be Strong, Courageous, and Patient, and GREATNESS will be the result!".
China Responds
Beijing has retaliated against Trump’s tariffs by announcing its own 34% tariff on US goods, which will come into effect on Thursday. Chinese vice-commerce minister Ling Ji stated that the tariffs are aimed at bringing the US back onto the right track of the multilateral trade system.
EU Response
EU trade ministers gathered in Luxembourg on Monday to discuss the bloc’s response to the tariffs. Germany and France have advocated for a tax targeting US tech giants, with French trade minister Laurent Saint-Martin stating, "We must not exclude any option on goods, on services". German economy minister Robert Habeck also suggested that Europe should be prepared to use its trade "bazooka" to punish countries that use economic threats to exert pressure on the EU.
Global Demand ‘Vanishing’
The global market is still reeling from the effects of Trump’s tariffs, with the main US oil contract dropping below US$60 a barrel for the first time since April 2021. Stephen Innes at SPI Asset Management warned that the market is telling us that global demand is vanishing, and a global recession is on the cards and coming on fast.
Negotiations Underway
US officials have stated that more than 50 countries have reached out to Trump to negotiate. Japan’s Prime Minister Shigeru Ishiba has held a call with Trump to discuss the tariffs, and Benjamin Netanyahu, prime minister of Israel, is due to meet with Trump today.
Conclusion
The global economy is facing a crisis as Trump’s tariffs continue to spark concerns about the impact on trade. While Trump remains optimistic about the chances of a deal, the market is still reeling from the effects of the tariffs. As the situation continues to unfold, only time will tell if the global economy can recover from this crisis.
FAQs
Q: What are the tariffs that Trump has imposed on imports?
A: A 10% "baseline" tariff on imports from around the world took effect on Saturday, with a slew of countries set to be hit by higher duties from Wednesday. Levies of 34% for Chinese goods and 20% for EU products have been imposed.
Q: What is the impact of the tariffs on the global market?
A: The global market is still reeling from the effects of Trump’s tariffs, with shares in New York joining the slump and all three major US indices falling more than 3% in early trading.
Q: What is the response of other countries to the tariffs?
A: China has retaliated against Trump’s tariffs by announcing its own 34% tariff on US goods, while the EU is considering a tax targeting US tech giants. Other countries, including Japan and Israel, are also seeking to negotiate with Trump.