The global economy seemed to be reacting strongly against President Donald Trump’s tariffs, which took effect on Wednesday. Business executives have cautioned that his policies might lead to a recession, major U.S. trading partners have begun imposing their own import taxes in response, and the stock market is experiencing volatility following days of decline.
Trump’s tariffs went into effect shortly after midnight, imposing a 104 percent rate on Chinese products, 20 percent on the European Union, 24 percent on Japan, and 25 percent on South Korea. Administration officials have attempted to reassure voters, Republican lawmakers, and CEOs that these rates are negotiable, although any adjustments could take months.
Typically, when an economic downturn is anticipated, investors purchase U.S. Treasury notes as a safe investment, viewing the federal government as stable. This time, however, government bond prices have fallen, resulting in an increased interest rate on the 10-year U.S. Treasury note, now at 4.45 percent, which indicates global apprehension towards Trump’s actions.
Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, explained that markets, including the Treasury market, are seeking signs of trade de-escalation. Without signs of reduced tensions, market stabilization will be difficult.
President Trump remained resolute despite stock market fluctuations. The S&P 500 index has decreased by more than 18 percent since February 18 as his tariff plans became clearer. On his social media platform, Truth Social, Trump emphasized optimism, suggesting it is a good time to invest and reassuring that the U.S. will emerge stronger.
Presidents often receive either excessive praise or criticism for economic conditions, affected by forces beyond their direct control. However, Trump’s unilateral imposition of tariffs has significantly impacted commerce flow, potentially creating political challenges if his plans do not succeed. After initially succeeding in influencing American institutions, he now faces challenges from global markets.
Jamie Dimon, CEO and Chairman of JPMorgan Chase, suggested there might “probably” be a recession, but deferred to his economists. Meanwhile, Delta Air Lines CEO Ed Bastian criticized the current administration’s strategic approach compared to Trump’s first term, highlighting the impact on the airline’s financial projections amid economic uncertainty.
Economic forecasters noted the series of negative impacts stemming from Trump’s return to the White House, which could lead to a downturn. Economist Joe Brusuelas from RSM consultancy mentioned that simultaneous shocks to various economic elements could tip the economy into a recession this quarter.
Treasury Secretary Scott Bessent has previously indicated that agreements with countries on tariff rates might take months. He reassured that the economy would recover in the “not too distant future” and described an “overwhelming” response from countries wanting to negotiate rather than escalate tensions, noting Japan, South Korea, and India as examples.
Despite efforts to stabilize global relations, new risks are emerging. China has enforced tariffs of 84 percent on U.S. goods, Canada has matched Washington’s 25 percent auto tariffs, and the EU has introduced new taxes on U.S. goods after Trump’s steel and aluminum tariffs. Trump is considering additional tariffs on copper, lumber, computer chips, and has announced impending taxes on imported drugs in a recent speech.