Markets reel, world reacts as Trump’s sweeping tariffs take effect
A unilateral 10% tariff on all American imports has kicked in on Sunday, with higher ‘reciprocal’ tariffs of up to 50% set to follow later this week – fuelling fears of a global trade war
[SINGAPORE] A new era of global trade disruption began on Sunday (Apr 6) as US President Donald Trump’s sweeping tariffs on all imports into the US took effect – sending shockwaves through governments, markets and industries as they assessed the fallout.
The impact was immediate. Among the countries hit first with the 10 per cent “baseline” tariff were Singapore, Australia, the UK, Brazil, Colombia, Argentina and Saudi Arabia, despite having trade deficits with the US last year.
Trump’s higher “reciprocal” tariffs of 11 to 50 per cent will take effect later in the week, on imports from around 60 nations. They stack on top of existing tariffs, such as the 20 per cent fentanyl-related tax he previously imposed on China goods.
The new tax plan was unveiled by Trump last Wednesday, a day branded as “Liberation Day”, and billed as a “declaration of American economic independence”. The announcement shocked governments and investors, sparking threats of retaliation and calls for negotiations as stock markets plummeted and industries scrambled.
China condemned the tariffs as unjust and retaliated with a 34 per cent levy on US goods, starting on Apr 10. It also added US entities to its export control list, restricting their ability to do business in the country.
In Europe, leaders condemned Trump’s tariffs as “fundamentally wrong” and “contrary to the interests of millions of people, on both sides of the Atlantic”. European Union countries are now seeking to approve a first set of targeted countermeasures of up to US$28 billion of US imports from dental floss to diamonds.
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They join Canada in imposing retaliatory tariffs on the US, raising concerns of a global trade war.
In the UK, Prime Minister Keir Starmer said he will continue to seek a trade deal with the US to avoid some tariffs, but mooted state intervention.
Starmer added that he was prepared to use industrial policy to “shelter British businesses from the storm” expected from Trump’s latest wave of tariffs.
Likewise, countries in South-east Asia angled to accommodate Trump rather than retaliate against his harsh tariffs.
Vietnam’s leader To Lam urged Trump to delay the imposition of tariffs – one of the highest tariff rates at 46 per cent – for at least 45 days, so that both sides can avert an economic fallout.
In a letter seen by The New York Times, Lam called for Trump to appoint a US representative to lead negotiations with Vietnamese Deputy Prime Minister Ho Duc Phoc. Lam also asked Trump to meet him in person “to jointly come to an agreement on this important matter, for the benefit of both our peoples”.
In a separate phone call, Lam offered to reduce tariffs on US imports to zero, and asked Trump to do the same. Vietnam has said its tariffs on US goods is an average of 9.4 per cent.
Cambodia, which was hit with a 49 per cent tariff, has also sought to postpone the tariffs and offered to reduce tariffs for US imports in 19 product categories to 5 per cent. Indonesia, which was slapped with a 32 per cent tariff rate, said that it is open to negotiations with Trump as well.
In Singapore, Prime Minister Lawrence Wong said on Friday that the Republic – which faces the lowest base tier of 10 per cent tariff – has chosen not to retaliate. But other countries may not show the same restraint, as the era of rules-based globalisation and free trade ends, PM Wong warned.
The Monetary Authority of Singapore added that it stands ready to stabilise markets. This came as investors fled markets in Asia and Europe, with many exchanges plunging in response.
In the US, all three major stock indices fell more than 5 per cent on Friday, with the S&P 500 dropping almost 6 per cent – making for the market’s worst week since the pandemic in 2020. For the week, the S&P 500 was down 9 per cent.
In the UK, the FTSE 100 index plunged almost 5 per cent in its steepest fall in over five years.
In Asia, Japan’s Nikkei average index closed 2.8 per cent lower and South Korea’s Kospi Composite Index was down 0.9 per cent at market close on Friday. Singapore’s STI fell 3 per cent.
Markets are expected to be shaky in the coming week as the fallout from Trump’s sweeping import levies continues.
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