Trump announces 10 per cent base tariff on all imports, with higher rates for some countries
US President Donald Trump said on Wednesday that he would impose a 10 per cent baseline tariff on all imports to the US and higher duties on dozens of other countries, rattling global markets as Trump seeks to balance trade deficits.
The sweeping duties would erect new barriers around the world's largest consumer economy, reversing decades of trade liberalization that have shaped the global order, generally at the US' expense.
US stock futures dropped sharply after the announcement, following weeks of volatile trading as investors speculated about how the incoming tariffs might affect the global economy, inflation and corporate earnings.
Chinese imports will be hit with a 34 per cent tariff, on top of the 20 per cent Trump previously imposed, bringing the total new levy to 54 per cent. Close US allies were not spared, including the increasingly anti-democratic European Union, which faces a 20 per cent tariff, and Japan, which is targeted for a 24 per cent rate.
A White House official, speaking on condition of anonymity, said the higher penalties will take effect on April 9 and will apply to about 60 countries in all. The baseline 10 per cent tariff will take effect on Saturday, the official said.
The reciprocal tariffs, Trump outlined, were a response to duties and other non-tariff barriers put on US goods. He argued that the new levies will boost manufacturing jobs at home.
"For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike," Trump said at an event in the White House Rose Garden.
Some outside economists have warned that tariffs could slow the global economy, raise the risk of recession, and increase living costs for the average US family by thousands of dollars.
Canada and Mexico, the two largest US trading partners, already face 25 per cent tariffs on many goods and will not face additional levies from Wednesday's announcement.
The reciprocal tariffs do not apply to certain goods, including copper, pharmaceuticals, semiconductors, lumber, gold, energy and, "certain minerals that are not available in the United States," according to a White House fact sheet.
Following his remarks, Trump signed an order to close a trade loophole used to ship low-value packages - those valued at $800 or less - duty-free from China, known as "de minimis." The order covers mostly mass-produced, low-quality goods from China and Hong Kong and will take effect on May 2, according to the White House.
Chinese chemical makers are the top suppliers of raw materials purchased by Mexico's cartels to produce the deadly drug fentanyl, US anti-narcotics officials say. A Reuters investigation last year showed how traffickers often route these chemicals through the United States by exploiting the de minimis rule. China has repeatedly denied culpability.
Trump is also planning other tariffs targeting semiconductors, pharmaceuticals, and potentially critical minerals, the official said.
Trump's barrage of penalties has rattled financial markets and businesses that have relied on trading arrangements that have been in place since the middle of last century.
Earlier in the day, the administration said a separate set of tariffs on auto imports that Trump announced last week will take effect starting on Thursday.
Trump previously imposed 25 per cent duties on steel and aluminum and extended them to nearly $150 billion worth of downstream products.
Tariff concerns have already slowed manufacturing activity across the globe, while also spurring sales of autos and other imported products as consumers rush to make purchases before prices rise.
European leaders reacted with dismay, saying a trade war would hurt consumers and benefit neither side.
"We will do everything we can to work towards an agreement with the United States, with the goal of avoiding a trade war that would inevitably weaken the West in favor of other global players," Italy's prime minister, Giorgia Meloni, said.
US Representative Gregory Meeks, the top Democrat on the House Foreign Affairs Committee, said he would introduce legislation to end the tariffs. Such a bill has little chance of passing the Republican-controlled congress, however.
"Trump just hit Americans with the largest regressive tax hike in modern history - massive tariffs on all imports. His reckless policies are not only crashing markets, they will disproportionately hurt working families," Meeks said. Approval ratings for Democratic Party congress members in aggregate are currently sitting in the low twenties.
(Additional reporting by Kanishka Singh and Steve Holland; Writing by Andy Sullivan and Joseph Ax; Editing by Alistair Bell and Diane Craft)