Trump announces tariffs, the highest import taxes since the 1800s

President Trump announced a baseline 10% tariff on U.S. imports, with steeper reciprocal levies on goods from Europe, Japan, China and more than 50 other nations.

Why it matters: Trump's announcement ends the free-trade era that has defined global commerce for decades — a move that risks higher consumer prices and economic damage.

Still, trade experts say that Mr. Trump’s claims include a heavy dose of exaggeration, as well as hypocrisy.

For example, Mr. Trump has singled out high tariff rates that countries charge on certain U.S. exports including Europe’s tax on cars and India’s levy on motorcycles. But the United States also has high tariff rates that it charges on certain imports, such as a 25 percent fee on light trucks. And Mr. Trump has lumped in friendly allies like Canada, which have some limits to U.S. exports outside a few sectors, with nations like China, which have extensive trade barriers.

The tariffs that Mr. Trump is rolling out now are also drastically raising trade barriers, potentially to a level beyond what other countries impose on the United States.

According to calculations by The New York Times, the trade measures that Mr. Trump has introduced so far have more than tripled the estimated dollar value of tariffs that importers must pay to bring products into the United States compared with last year. And that’s before his new reciprocal tariffs and 25 percent auto levies go into effect this week.

In his first term, Mr. Trump’s collective tariff actions on foreign metals, China and other products ended up doubling U.S. tariffs, but those changes took roughly two years to unfold, according to Daniel Anthony, the president of Trade Partnership Worldwide, a research firm.

“They’re reciprocal — so whatever they charge us, we charge them, but we’re being nicer than they were,” he said on Monday.

William Reinsch, a senior adviser at the Center for Strategic and International Studies, a Washington think tank, called the president’s claims about trade “a huge exaggeration.”

Mr. Reinsch said that Mr. Trump’s idea that the United States gave the world a gift by opening its markets after World War II and was now locked in a permanent disparity on tariffs was “wrong historically” and “wrong factually.”

“The unfairness that he rails on is not what he says it is,” he said.

U.S. tariff rates are low, but not that low

America’s tariffs are, on average, lower than those of many countries. But they are pretty comparable to those of other rich nations, which also tend to have low barriers to imports.

What they're saying: "This is one of the most important days in my opinion, in American history," Trump said in remarks delivered at a "Liberation Day" event in the Rose Garden.

• "We will supercharge our domestic industrial base, we will pry open foreign markets and break down foreign trade barriers," Trump added.

• Stocks were higher as Trump spoke; the levies were not as severe as the 20% global tariff some reports had suggested he was considering.

What to watch: It is President Trump's gamble to revive domestic manufacturing, raise revenues to offset tax cut costs and push other nations to adhere to non-trade related demands.

• Senior White House officials say any negotiations to bring down reciprocal tariffs could be a long process.

The trade actions unveiled on Wednesday come on top of 25% tariffs on foreign-made vehicles and auto parts announced last week that will take effect at midnight.

• Steel and aluminum imports face similar tariff rates, with taxes threatened on lumber and pharmaceuticals.

• The 25% tariffs applied on Canadian and Mexican imports that don't comply with the USMCA trade agreement will go into effect until the nations impose tighter border controls, senior officials said.

• When those tariffs are removed, the North American countries will be subject to the baseline tariffs.

The big picture: Economists see stronger odds of a recession this year, alongside higher prices and weaker growth as a result of the trade war.

• Trade policy uncertainty has businesses in limbo and stock markets on edge. Recent economic surveys show consumers planning to pull back on spending and bracing for higher prices.

• If widespread enough, a drop-off in demand and steady price increases would result in a dreaded outcome for Americans: economic "stagflation."

Mexico to respond to tariffs tomorrow

Mexico will issue a response to Donald Trump’s tariffs tomorrow, the country’s prime minister has said.

Claudia Sheinbaum has released a statement saying she will respond to Mr Trump’s new round of tariffs on Thursday at 2pm, according to CNN.

Ms Sheinbaum said earlier that said that Mexico will “announce a comprehensive program” of measures but insisted this would not be “a tit-for-tat on tariffs”.

Mexico was spared any additional tariffs on top of the 25pc levies already imposed by the Trump administration.

12:10AM

‘If you retaliate, there will be escalation,’ warns Trump’s treasury secretary

Donald Trump’s treasury secretary Scott Bessent has warned that the US will increase tariffs if its trading partners retaliate.

“My advice to every country right now: Do not retaliate,” he told Fox News. “If you retaliate, there will be escalation.”

Mr Bessent said the purpose of the tariffs is “setting the stage for long-term economic growth”

“With our gigantic government spending, it was unsustainable,” he said. “We have taken us off that trajectory, and we’re putting us back on a sound trajectory.”

When asked how countries like China, which will see a 54 per cent total tariff rate on imports, should respond, Mr Bessent said, “We’ll see what they do.”

11:57PM

Italian PM says US tariffs are ‘wrong’

Italian premier Giorgia Meloni has criticised new US tariffs on imports from the European Union and warned a trade war would only weaken the West.

She said: “The introduction by the US of tariffs towards the EU is a measure that I consider wrong and that does not suit either party.

“We will do everything we can to work for a deal with the United States, aiming to prevent a trade war that would inevitably weaken the West in favour of other global actors.”

She said Rome would discuss the issue with other European partners, adding that either way “we will act in the interest of Italy and its economy”.

Donald Trump on Wednesday unveiled a raft of punishing tariffs targeting countries around the world including some of its closest trading partners, including duties of 20 percent on EU goods.

Ms Meloni, leader of the hard-Right Brothers of Italy party, has previously sought to avoid criticising Trump, instead positioning herself as a bridge between Brussels and Washington.

Data from the World Trade Organization showed the United States had a trade-weighted average tariff rate of 2.2 percent in 2023, compared with 2.7 percent for the European Union, 1.9 percent in Japan, 3.4 percent for Canada, 3 percent for China and 1.7 percent for Switzerland.

Some poorer countries do have higher rates. India’s trade-weighted average tariff rate is 12 percent, while Mexico’s is 3.9 percent and Vietnam’s is 5.1 percent.

“U.S. tariff rates are somewhat lower than tariff rates in other countries,” said Ed Gresser, the vice president and director for trade and global markets at the Progressive Policy Institute, a think tank. “But vis-à-vis other rich countries, it’s not a lot.”

Tariffs for specific products vary widely. The United States levies individual tariff rates on about 13,000 foreign products, according to Doug Irwin, a trade historian. The U.S. trades with almost 200 countries, each of which has set its own rates for different products.

These rates were negotiated at the World Trade Organization or its predecessor, a treaty called the General Agreement on Tariffs and Trade. The tariff rates that countries charge one another on products often don’t match, because different countries had different priorities when they negotiated their levels.