US trading partners were left on edge on Tuesday, scrambling to figure out what new tariffs could be on the horizon after Donald Trump made a cryptic announcement about his next steps.
While the US president didn’t specify which countries would be targeted, he did promise to be “very kind” in addressing what he calls unfair trade imbalances.
The uncertainty surrounding his plans has sent ripples across global markets, leaving many wondering how this could affect the international economy.
A ‘Very Kind’ Approach?
Trump, who has been using his presidential powers more aggressively since taking office in January, hinted that he could announce details about “reciprocal tariffs” as early as Tuesday night or Wednesday.
When asked for more specifics, Trump reassured reporters, saying, “We’re going to be very nice, relatively speaking, we’re going to be very kind.”
His words may have been intended to calm concerns, but critics fear this could provoke a global trade war, especially with major players like China, Canada, and the European Union ready to respond.
Growing Global Anxiety Over Potential Trade War
In response to Trump’s unpredictability, stock markets worldwide have been jolted, with equities taking a hit as fears of a recession grew.
The Asian markets were particularly affected, with sharp declines on Monday following Trump’s comments that tariffs could be imposed on “all countries.”
However, markets showed some signs of recovery on Tuesday after Trump reassured everyone he would be “nice.” Despite these reassurances, analysts are raising alarms.
Goldman Sachs has raised its recession probability from 20% to 35%, largely due to concerns over Trump’s tariff policies.
Counter-Tariffs and Global Reactions
As Trump continues to push for new tariffs, US trade partners are moving quickly to protect themselves.
China, Canada, and the European Union have already responded with their own counter-measures.
The European Union, for instance, is set to begin enforcing a 25% tariff on US car imports by Thursday.
Ursula von der Leyen, the EU’s chief, emphasized that while the EU is still hoping for a negotiated solution, they are ready to act if needed.
In Asia, countries like Japan and Vietnam are preparing to adjust their trade policies, with Vietnam announcing plans to cut duties on a range of goods, including cars and some agricultural products.
Japan, too, is setting up consultation centers for businesses affected by US tariffs, demonstrating how countries are bracing for impact.
The Impact on Specific Sectors and Countries
Trump’s tariffs could potentially target industries like pharmaceuticals and semiconductors, alongside broader country-based tariffs.
According to reports, the upcoming measures may focus on a group of countries that consistently have large trade imbalances with the United States—a group referred to as the “Dirty 15.”
This includes nations such as China, the EU, Mexico, Vietnam, and others.
If these tariffs go ahead, they could affect a significant portion of global trade.
Concerns About Economic Independence
As the situation unfolds, leaders from various countries are expressing their concerns.
European Central Bank President Christine Lagarde warned that Europe faces an “existential moment” in the face of Trump’s tariffs, urging the EU to strive for greater economic independence.
Meanwhile, British Prime Minister Keir Starmer discussed ongoing trade negotiations with Trump, while German Chancellor Olaf Scholz reiterated the EU’s readiness to respond firmly but remain open to compromise.
The Road Ahead
While the global uncertainty remains high, some experts believe there is a possibility that these tariffs could be reduced or even delayed, as they were with Mexico and Canada in February.
For now, everyone’s attention is on Trump’s next move, which will likely set the tone for future trade relations.