Washington
CNN
—
President Donald Trump on Wednesday unveiled expansive new tariffs in a major escalation of his trade war, referring to the historic move as a “declaration of economic independence.” Trump’s risky bet to address unfair trade practices could send prices higher for American consumers and weaken economic growth, according to most economists.
Using national emergency powers, Trump announced 10% tariffs on all imports into the United States, and even higher tariffs on goods from about 60 countries or trading blocs that have a high trade deficit with the US. That includes China and the European Union, which will be levied new duties of 34% and 20%, respectively.
Trump’s latest actions represent the most significant escalation in US tariffs in nearly a century, since the Smoot-Hawley Act of 1930. But the trade spat doesn’t end there.
Foreign countries, including long-time US allies, say Trump’s tariffs won’t go unanswered, setting the stage for a global, tit-for-tat trade war that could quickly spiral out of control. Such a development would only fuel inflation further and weigh on US consumers, many of whom are already on the ropes.
Trump’s “Liberation Day” announcement did little to clear the dense fog of uncertainty. And even more tariffs by sector are coming down the pike, senior White House officials said Wednesday on a phone call with reporters.
Here are key takeaways from Trump’s sweeping tariff hike.
Trump’s so-called reciprocal tariffs won’t match the ones foreign countries impose on the United States unless a country already had a 10% US tariff. They also won’t stack on top of existing duties by sector.
“We will charge them approximately half of what they are and have been charging us, so the tariffs will be not a full reciprocal,” Trump said from the Rose Garden on Wednesday afternoon. “I could have done that, I guess, but it would have been tough for a lot of countries and we didn’t want to do that.”
For example, instead of matching the European Union’s 39% tariff on US goods, the new duty on the EU will be 20% instead. China, which was already slapped with a 20% tariff for its role in fentanyl trade, will be levied an additional 34% — half of the 67% tariff it imposes on the US — bringing its new rate to 54%.
About 60 countries will see tariffs higher than 10%. The baseline 10% tariff goes into effect on Saturday, one minute after midnight, then any higher tariffs will go into effect on April 9.
The new tariffs won’t add on to tariffs previously announced on steel, aluminum and cars.
The 25% tariff on goods from Mexico and Canada that don’t comply with the United States-Mexico-Canada Agreement will remain in place until Trump determines that issues around fentanyl and illegal immigration have been resolved. Whenever that happens, Canada and Mexico will then default to the administration’s current trade approach for other countries.
Senior White House officials said Trump also wants to levy separate tariffs on semiconductors, pharmaceuticals and critical minerals, to be announced at a later date.
Several countries have signaled that they will respond to Trump’s tariffs, and the International Chamber of Commerce said on Wednesday that there’s “a clear systemic risk to the global trading system” if trade tensions reach a fever pitch.
China, Japan, and South Korea said on Sunday they will respond to the new duties in lockstep. All three countries will be levied duties higher than 20%.
Mexican President Claudia Sheinbaum said she will unveil a broad economic plan on Thursday in response to Trump’s tariffs, which will include steps to protect the country’s automotive industry.
Various European leaders chimed in after Trump’s announcement, also pledging to respond after they study what the new tariffs will mean for their countries. Karin Keller-Sutter, president of the Swiss Federation, posted on X that the country’s officials “will quickly determine the next steps.”
After Trump’s announcement, Canadian Prime Minister Mark Carney said the new tariffs will “fundamentally change the international trading system” and that “we’re going to fight these tariffs with counter measures.”
“Sit back, take a deep breath, don’t immediately retaliate,” US Treasury Secretary Scott Bessent told CNN’s Kaitlan Collins in an interview. “Let’s see where this goes, because if you retaliate, that’s how we get escalation.”
He warned other countries that “doing anything rash would be unwise.”
Skittishness on Wall Street and Capitol Hill
Reaction was swift from some corners: US stocks plummeted in after-hours trading and US senators voted on a Democrat-led measure to rebuke Trump’s trade policy.
Dow futures shed more than 900 points by early evening, or 2.19%; while S&P 500 futures lost 3.38% and futures tied to the Nasdaq 100 tumbled 4.28%. The futures rout was widespread, with shares in Apple, Nike, and Walmart — companies with supply chains that criss cross the globe — all taking a dive.
“President Trump just finished his tariff speech at the White House and we would characterize this slate of tariffs as ‘worse than the worst case scenario’ the Street was fearing,” said Dan Ives, senior analyst at Wedbush Securities, in a note.
As expected, Democrats were up in arms over Trump’s tariffs throughout Wednesday.
“Republicans are crashing the American economy in real time and driving us to a recession,” House Minority Leader Hakeem Jeffries said in a news conference. “This is not Liberation Day, it’s Recession Day.”
Meanwhile, Rep. Greg Meeks of New York, the top Democrat on the House Foreign Affairs Committee, said Wednesday that he plans to force a vote over tariffs in the coming days using a procedural maneuver that can be used to bypass leadership and force floor votes. His previous efforts to force a floor vote over tariffs have all been thwarted by GOP leadership before.
Tariff hikes inflict higher costs on US-based importers, which are typically passed on to American businesses. Many of them said on Wednesday they’re bracing for the fallout of Trump’s latest actions.
“It’s concerning, it’s going to be expensive, it’s going to require us all to make decisions,” Benjamin Colvin, president and co-founder of Devil’s Foot Brewing in Asheville, North Carolina, said Wednesday at a news conference with other business owners in the state.
Colvin said that his company, which produces craft sodas and zero-proof cocktails, has already seen production costs ratchet higher since Trump slapped tariffs on aluminum and steel.
Trump tariffs would affect a vast number of companies, including grocery stores, which sell various imported items.
“Our food system is intricately linked with global markets — including products not grown in the United States like bananas or seasonal items — which helps keep prices down while providing American shoppers year-round access to safe, nutritious food,” Leslie Sarasin, president and chief executive officer of The Food Industry Association, said Wednesday in a statement.
