The world’s leaders and stock markets were braced on Wednesday night as Donald Trump strode into the White House’s Rose Garden to unveil what he declared as ‘liberation day’.
After claiming his country “has been looted, pillaged, raped, plundered by nations near and far, both friend and foe alike”, the US president announced he would impose reciprocal tariffs to match duties on American goods by other nations.
“It’s our declaration of independence,” he said.
“Taxpayers have been ripped off for more than 50 years. But it is not going to happen anymore,” he said.
Here, The i Paper takes a look at the key questions raised by Trump’s latest escalation of his global trade war.
Donald Trump declared a national economic emergency to impose a baseline 10% tariff on all imports, and “individualised reciprocal higher tariffs” on countries with which the US has the largest trade deficits.
That means the UK and countries such as Australia and New Zealand were kept at the basic rate, but other key trading partners including China and the EU, or as Trump called them “the worst offenders”, were slapped with much higher taxes.
Those include 20 per cent for the EU, 24 per cent for Japan, 25 per cent for South Korea, 26 per cent for India, 34 per cent for China and 46 per cent for Vietnam. Other countries facing above-baseline figures include Switzerland, Israel, South Africa, Thailand, Sri Lanka and Pakistan.
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The reciprocal tariffs do not apply to goods such as copper, pharmaceuticals, semiconductors, lumber, gold, energy and “certain minerals that are not available in the United States,” the White House said in a fact sheet.
Canada and Mexico, which already face 25 per cent tariffs, were exempt from the fresh round of duties, which one business leader likened to “dodging a bullet into the path of a tank”.
Notably, Russia was not on Trump’s tariff list, despite running a $2.5bn goods trade surplus last year, according to the US Trade Representative’s office.
Trump also shut a loophole used to ship low-value packages from China, which is likely to hurt its giant online retailers.
The baseline tariff rate will come into effect at midnight, 5 April and the higher rates will be implemented from 9 April.
“These tariffs will remain in effect until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated,” the White House said.
Trump with his list of countries and the different tariffs he plans to impose on them (AP Photo/Mark Schiefelbein)Why is he doing this?
Trump has previously boasted that tariffs will “make us rich as hell”. His scheme is aimed at boosting domestic manufacturing, bring in hundreds of billions in new revenue and what he says will restore fairness to global trade.
The White House has said the tariffs and other trade imbalances led to an $1.2tn imbalance last year.
The US president has also promised that the new taxes will see an uplift in factory jobs.
Trump’s top economist, Stephen Miran, told Fox the tariffs would work out well for the US in the long run, even if they cause some initial disruption.
“Are there going to be short-term bumps as a result? Absolutely,” he said.
Global markets have already taken the first shocks from the statement, with the Asian markets tumbling in the hours after.
There is now also the raised prospect of a global economic downturn.
“This is a game-changer, not only for the US economy but for the global economy. Many countries will likely end up in a recession.” Olu Sonola, head of US economic research at Fitch Ratings, said.
“You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time.”
Thousands of car manufacturing jobs could be put at risk by Trump’s tariffs on the auto industry alone (Photo: Ben Stansall/ AFP)How will the UK be impacted?
Britain’s car industry is already braced for 25 per cent tariffs the US president confirmed would come into effect at 5am on Thursday, and could cost the sector up to 25,000 jobs.
The impact of the tariffs on British goods could hit UK GDP, potentially lowering it by 2.5 per cent over three years, the National Institute of Economic and Social Research (NIESR) has previously estimated.
The value of the dollar has already edged up in reaction to Trump’s announcement, and if that continues it could push import costs for UK firms even higher, which would then be passed onto consumers.
Experts have warned increased prices could lead to demand for higher wages, and therefore higher costs for businesses.
There have also been warnings about the potential for petrol prices, inflation and interest rates – and mortgages – to go up. Tariffs on the EU would also have a knock-on effect for the UK.
However there are still hopes for a deal with the US, business secretary Jonathan Reynolds said on Wednesday evening, that “we hope will mitigate the impact” of the tariffs.
What will happen now?
Some trading partners – including the EU – are expected to respond with countermeasures of their own that could lead to dramatically higher prices. The EU has said it has a “strong plan” to retaliate and Ursula von der Leyen is expected to make a statement early Thursday.
But the impact could be felt strongly in the US too, with analysts warning that the move will dramatically raise the likelihood of a recession.
Former US vice president Mike Pence said: “These tariffs are nearly 10x the size of those imposed during the Trump-Pence Administration and will cost American families over $3,500 per year.”
Keir Starmer’s government is not expected to hand out any immediate retaliatory measures, although Jonathan Reynolds has reiterated that “nothing is off the table”.
And economists have said the 5 April date leaves a small window for some last-minute negotiations that could delay or alter the tariffs.
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Finally We wish PressBee provided you with enough information of ( The key questions on Trump’s tariffs – answered in under five minutes )
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