Pedestrians walk past a stock quotation board showing the Nikkei share average and the exchange rate between Japanese yen and U.S. dollar outside a brokerage in Tokyo, Japan April 3, 2025. REUTER
A man walks past a screen displaying U.S. President Donald Trump, at the Bombay Stock Exchange (BSE) ahead of Trump’s tariff plans, in Mumbai, India, April 2, 2025. REUTERS
U.S. President Donald Trump holds a pen on the day he signs an executive order related to the U.S. live entertainment ticketing industry in the Oval Office at the White House in Washington, D.C., March 31, 2025. REUTERS
Summary
NEW YORK (Reuters) – President Donald Trump’s new tariffs announced on Wednesday sent shockwaves through global markets amid worries the aggressive duties will slow growth, hit corporate earnings and stoke inflation, with one analyst calling the move markets’ “worst-case scenario.”
Global markets have been whiplashed since Trump took office and kept up a stream of rhetoric that threatened to unleash a global trade war. Trump’s new levies crystallized those fears.
He set a baseline of 10% across all imports and higher duties on some of the U.S.’s biggest trading partners.
Taken together, the duties will erect new barriers around the world’s largest consumer economy, reversing decades of trade liberalization that have shaped the global order following World War Two.
In interviews, several investors and analysts said the rhetoric around tariffs had already caused an economic slowdown, hitting both consumer and corporate confidence. The big unknown now is how trading partners will react, they said.
While Wednesday’s announcement provided a baseline, it is likely to be followed by months of negotiations and debilitating uncertainty.
“It’s created bad sentiment on the future, which slows down things,” said John Luke Tyner, fixed income analyst at Aptus Capital Advisors in Fairhope, Alabama. “You’ve seen slowdowns in projects, capital projects, CEOs’ commentary on markets and the economy.”
Jay Hatfield, CEO at Infrastructure Capital Advisors, spoke bluntly of the impact. “This is the worst-case scenario that the market was expecting, and that’s enough to potentially send the U.S. into a recession and that’s why the futures are so weak,” he said.
In the United States, stocks future fell as Trump spoke, with S&P 500 E-minis down 3.5%. In currencies, the dollar fell 0.9% against the yen at 148 yen, while the Mexican peso was about 0.4% lower. Prices of safe-havens assets such as gold and Treasury rose.
In his speech at the White House Rose Garden, Trump cast the levies in terms of fairness, arguing that the “reciprocal” tariffs were a response to duties and other non-tariff barriers put on U.S. goods.
“In many cases, the friend is worse than the foe in terms of trade,” Trump said, calling it a declaration of independence.
