President Donald Trump's new tariffs, known as "reciprocal" tariffs, are set to come into effect, with steep charges, including 104% tariffs on Chinese goods, beginning to be imposed. This move has escalated the global trade war initiated by Trump, while he is also getting ready for negotiations with some nations.
The implementation of Trump's tariffs has disrupted the long-standing global trading system, sparking concerns of an economic downturn and causing a significant drop in stock markets worldwide. The S&P closed below 5,000 for the first time in nearly a year and is edging towards a bear market, being 20% below its recent peak.
Since the announcement of the tariffs, S&P 500 companies have seen a loss of $5.8 trillion in stock market value in just four days, marking the most substantial decline since the index's inception in the 1950s. Asian markets resumed their decline on Wednesday, with Japan's Nikkei down over 3% and South Korea's currency hitting a 16-year low. U.S. stock futures indicate the potential for a fifth consecutive day of losses on Wall Street.
Trump's stance on the longevity of the tariffs has been contradictory, calling them "permanent" but also claiming they are prompting other countries to seek negotiations. He mentioned that several countries are showing interest in making deals, hinting at forthcoming agreements with countries like South Korea, Japan, and Italy.
The recent escalation in tariffs includes a significant increase in duties on Chinese imports in response to Beijing's retaliatory tariffs. China has pledged to combat what it sees as coercion. Economists have cautioned that American consumers are likely to face price hikes on various products due to the trade tensions.
The impact of the newly implemented tariffs may take some time to fully materialize, as goods already in transit at the time of midnight will be exempt from the new charges if they arrive in the U.S. by May 27. A large majority of Americans anticipate a rise in prices for everyday items in the next six months, according to a recent Reuters/Ipsos poll.
Trump's recent actions, such as the 10% across-the-board tariffs on imports from numerous countries, have added to the trade tensions. The latest round of tariffs, aimed at countries viewed as exploiting the U.S., commenced at 12:01 a.m. ET.