President Donald Trump’s new round of “reciprocal” tariffs on dozens of countries took effect Wednesday, escalating his global trade war even as preparations for negotiations with some nations were underway. The latest measures include a massive 104% duty on Chinese imports.
Trump’s sweeping tariffs have disrupted the global trading system that has existed for decades, stoked fears of a recession, and triggered sharp declines in global markets. The S&P 500 has lost nearly $6 trillion since the tariffs were unveiled a week ago—the steepest four-day drop since the index’s inception in the 1950s. It is now approaching bear market territory, typically defined as a 20% drop from recent highs.
Asian markets resumed their slide on Wednesday: Japan’s Nikkei dropped more than 3%, South Korea’s currency hit a 16-year low, and government bonds were sold off as investors fled to the safety of cash. U.S. stock futures also pointed to a fifth consecutive day of losses on Wall Street.
Despite describing the tariffs as “permanent,” Trump has sent mixed signals, also claiming they are working as leverage to bring other countries to the negotiating table. “We have a lot of countries coming in that want to make deals,” he said Tuesday at the White House. He also suggested that China may soon seek an agreement.
Talks have been scheduled with close U.S. allies and major trading partners like Japan and South Korea. Italian Prime Minister Giorgia Meloni is set to visit next week, and Vietnam’s Deputy Prime Minister will meet with Treasury Secretary Scott Bessent later Wednesday to discuss the heavy tariffs impacting Vietnamese exports.
Earlier Tuesday, markets briefly rose on hopes of trade deals, but those gains were erased by the end of the session.
China Vows to Fight Back
Trump nearly doubled tariffs on Chinese goods, raising them from last week’s 54% to 104%, in retaliation for counter-tariffs announced by Beijing. China has vowed to resist what it called economic blackmail.
Other countries are moving quickly to shield key sectors from the impact. South Korea, for example, rolled out emergency measures to support its auto industry, including tax breaks and subsidies.
Economists warn that U.S. consumers will ultimately bear the cost of the trade war through higher prices on everyday goods, from sneakers to wine. A recent Reuters/Ipsos poll found that nearly three-quarters of Americans expect prices to rise in the next six months.
The full impact of the tariffs may take time to materialize. Goods already en route to the U.S. before the tariffs took effect at 12:01 a.m. ET will be exempt, provided they arrive by May 27.
Trump’s earlier 10% blanket tariff on imports from multiple countries began on Saturday. The newest round targets nations he says are “ripping off” the U.S., including longtime allies like the European Union. The EU was hit with a 20% tariff, along with additional industry-specific duties. The bloc is expected to vote on initial countermeasures later Wednesday.
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Trump argues the tariffs are a response to trade barriers that hinder U.S. businesses and has accused countries like Japan of manipulating their currencies to gain trade advantages—a charge Tokyo denies. Japan’s finance minister said Wednesday that currency policy could be part of future trade talks.
The administration may not be done yet. Speaking to Republican lawmakers Tuesday evening, Trump said he would soon announce "major" tariffs on pharmaceutical imports—one of the few product categories currently exempt. A chart accompanying the announcement shows estimated price increases from the tariffs: 10% for medical diagnostic tools, and up to 30% for items like computer parts, toys, and video games.
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