The world’s largest economies reacted with swift condemnation on Thursday following President Donald Trump’s dramatic escalation of tariffs, a move that sent Asian markets plummeting and raised fresh fears of a global trade war.
Experts have warned that the unprecedented levies, which go far beyond what many had anticipated, could upend the global economy and drive up costs for American consumers and manufacturers alike.
Markets in Asia, the first to react after Mr. Trump’s overnight announcement, tumbled sharply. Investors, taken aback by the scale of the new tariffs, offloaded stocks amid concerns that retaliatory measures from China and other major economies could trigger a full-scale economic confrontation. As the shockwaves spread, European leaders made it clear that they would respond in kind, setting the stage for one of the most significant global trade disputes in recent history.
China Vows Retaliation
China, the principal target of Mr. Trump’s new measures, wasted no time in issuing a stern warning. Beijing pledged immediate countermeasures, vowing to “safeguard its own rights and interests” against what its state media labelled as “self-defeating bullying.” The Chinese government has long opposed Trump’s aggressive stance on trade, arguing that his tariff policies will ultimately hurt American consumers as much as foreign competitors.
While Mr. Trump has for weeks hinted at imposing “reciprocal tariffs” to counter perceived unfair trade practices, the extent of the new levies took many by surprise. The United States will now subject Chinese goods to an eye-watering 34 percent tariff, a steep escalation from the duties imposed since his return to office in January. Other major economies were not spared either: the European Union faces a 20 percent tariff, Japan 24 percent, and India 26 percent.
Global Condemnation and Market Fallout
The move drew immediate criticism from global business groups, trade experts, and policymakers. Democratic lawmakers, and even some Republicans, swiftly denounced the decision, citing the potential harm to American businesses reliant on foreign imports. In Brussels, European Commission President Ursula von der Leyen issued a defiant response, declaring that the EU would stand firm against the White House’s unilateral approach.
“If you take on one of us, you take on all of us,” she warned during an early morning news conference, signalling a united European front against Trump’s aggressive trade stance.
The uncertainty triggered a selloff in Asian markets, with stocks tumbling across major indices. Investors fear that retaliatory measures from China and the European Union could not only disrupt supply chains but also inflict significant damage on global economic growth. Experts have also warned that the steep tariffs could drive up costs for U.S. manufacturers, many of whom depend on foreign raw materials and components.
Auto Industry Hit Hard
Perhaps most controversial among the new tariffs is the blanket imposition of levies on all automobiles manufactured outside the United States. The move adds to the steel and aluminum tariffs that Mr. Trump imposed earlier this year, further straining relations with America’s trading partners. Auto manufacturers have expressed alarm at the policy, warning that the increased costs will inevitably be passed on to consumers.
“The tariffs are based on subjective and unilateral assessments,” China’s commerce ministry said in a statement, accusing the U.S. of launching a “blatant attack on free trade.”
A Risky Strategy
The White House has defended the move as a necessary step to revive domestic manufacturing and protect American industry. Senior administration officials suggested there was little appetite for negotiations, even with allied nations that had offered to reduce their own trade barriers in recent days.
Mr. Trump himself framed the tariffs as a response to a national emergency, arguing that they were essential to correcting what he views as decades of unfair trade practices that have left the U.S. at a disadvantage.
However, critics argue that instead of addressing legitimate concerns over global trade rules, Mr. Trump is dismantling the very system that governs international commerce. Eswar Prasad, a professor of trade policy at Cornell University, cautioned that the President’s approach risks destabilising global markets rather than fixing systemic trade imbalances.
“Trump has chosen to blow up the system governing international trade,” he said, warning of severe economic repercussions if tensions continue to escalate.
What Happens Next?
The coming weeks will prove pivotal as China, the European Union, and other affected nations decide on their next course of action. Retaliatory tariffs are widely expected, which could further inflame tensions and lead to prolonged economic uncertainty. Business groups in the U.S. have already called on the administration to reconsider its approach, arguing that the strategy could do more harm than good.
For now, the world watches nervously as the prospect of an all-out trade war looms large. Whether President Trump’s gamble will pay off or backfire spectacularly remains to be seen, but one thing is certain—global markets are bracing for a turbulent ride ahead.
Main Image: By Ajay Suresh from New York, NY, USA – NASDAQ MarketWatch, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=88233788
