Trump's Tariffs Cause Global Chaos
Wednesday 2 April 2025, or ‘Liberation Day’ as Donald Trump called it, will go down in history as one of the most significant days for the global economy. President Trump, stood in the Rose Garden of the White House, presented his reciprocal tariff chart to a gathering of press, and millions watching worldwide.
Trump announced a 39% reciprocal tariff on the European Union, claiming the bloc currently charges the United States a 20% tariff, which it does not. After hours of confusion, Financial Writer for The Atlantic James Surowiecki broke down the tariffs and how they were decided by the Trump administration. Surowiecki said on X, “They didn't actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country's exports to us.”
For the past two weeks, global markets have been in turmoil as a result of the unpredictability of Trump’s tariff policies. In a move that sent the markets tumbling, Trump announced a 104% tariff across all Chinese imports on Tuesday 8 April. The next day, this was increased to 125% due to a perceived ‘lack of respect’ shown from the Chinese. China then imposed a retaliatory 84% tariff on the US, effective from Thursday, which triggered further retaliations from the US. At close of business on Friday 11 April, Chinese tariffs on US imports stand at 125%, whilst US tariffs on Chinese imports stands at 145%, resulting in the dollar slumping to a three-year low.
All other reciprocal tariffs that were announced on Trump’s ‘Liberation Day’ have been temporarily suspended for 90 days as a result of market turmoil this past week. This announcement saw most global markets recover from a disastrous start to the week. The two main US markets, the S&P 500 and the Dow Jones Industrial Average closed on Friday up 1.81% and 1.56% respectively. European stocks closed slightly lower on Friday, with regional Stoxx 600 Index down 0.1%, whilst in the UK, the FTSE 100 closed down 1.1%
Overall, the markets recovered towards the end of the week following Trump’s tariff reversal, but are still down an average of 6% over the past six months.