U.S. Tariffs: Shock to the Global Economy and International Markets

U.S. President Donald Trump imposed tariffs on 57 countries on April 2, which he dubbed “Liberation Day.” The tariffs ranged from 10% to 50%, and even exceeded 100% in the case of China. The measures targeted countries with which the U.S. recorded a trade deficit, including Israel and other nations that are strong U.S. allies in Europe and the Middle East. Trump believes the move will eventually jumpstart the U.S. manufacturing sector, increase jobs and revenue, and, as part of a broader American strategy, correct its economic course and address structural imbalances in it.

Instead, the tariffs triggered a global economic crisis—the worst since the 2008—and growing fear that Trump’s tariffs will spark trade wars, particularly between the United States and China, with potentially irreversible or hard-to-correct economic consequences worldwide.

Three Readings on the U.S. Tariffs

The tariffs, which came into effect April 9, represent the largest increase in taxes on imported goods since the Smoot-Hawley Tariff Act of 1930, which only deepened the Great Depression in America. President Trump described the tariffs as “reciprocal,” arguing that every country in the world has its own tariffs and trade barriers. However, the new measures are fundamentally based on the U.S. trade balance with other nations that stood at an approximately $100 billion deficit by the end of 2024. The tariffs were calculated using a formula—deficit divided by U.S. imports, with a minimum rate of 10%—resulting in a package of tariffs that varied in value from one country to another.

China topped the list with the highest tariff rate increase—initially set at 34% at the time of the announcement, Trump raised it to 104% on March 8—followed by Lesotho, 50%, Cambodia, 49%, Madagascar, 47%, and Vietnam, 46%. The tariffs also extended to several Arab countries: Egypt, 10%; Syria, 41%, Algeria, 30%, the Gulf States (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates), 10%; and Jordan, 20%.

As mentioned earlier, the increase was also applied against strong U.S. allies and key trading partners, including: the 27 member nations of the European Union (EU), 20%; Israel, 17%; Japan, 24%; India, 26%; and South Korea, 25%. Only four countries were exempted: Russia, Belarus, Cuba, and North Korea.

White House Press Secretary Karoline Leavitt explained that Russia’s exemption was due to the disruption of trade between the two nations as a result of U.S. sanctions against the Russian Federation. Due to the ongoing Russia-Ukraine war, the trade volume between them plummeted to around $3.5 billion in 2024, compared to $35.7 billion in 2021, the year before Russia invaded Ukraine.

- First Reading

The tariff increases reflect the United States need for more funds to address its economic difficulties, which have been worsening for years. Although it is a step aimed at generating profit and revenue, estimated at around $3.1 trillion over 10 years of implementation, Trump indicates that these tariffs could generate more than a trillion dollars in the coming year.

However, the tariffs were presented as a systematic plan to improve the U.S. economy. During an interview with CNN on April 3, U.S. Secretary of Commerce Howard Lutnick linked the tariffs to Trump’s broader vision for revitalizing and reforming the economy. On the other hand, the tariffs aim to raise more funds that will contribute to addressing economic imbalances, foremost of which is reducing the national debt, as well as stimulating U.S. consumption and encouraging American industry, ultimately leading to an economic recovery, increased employment rates, and higher state tax revenues.

- Second Reading

They are intended to punish other countries for what is considered their unfair or exploitative economic policies. These tariffs are viewed as a legitimate right of the United States, especially given that the global financial system and its institutions have failed to achieve economic justice among nations or hold countries like China accountable for manipulating and intervening in their currency exchange rate, or for allegations related to the theft of trade data, intellectual property, and American technology.  

All of this has had an impact on the U.S. economy. A study titled “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade” indicates that the influx of cheap Chinese goods into global and American markets between 1999 and 2011 contributed to the loss of around one million jobs in the manufacturing sector and nearly two million jobs across the broader U.S. economy.

At the same time, these tariffs are expected to undermine Chinas economic growth and push it away from relying on exports as the main driver of its economy toward boosting domestic consumption. However, this shift poses a challenge given the continued decline in domestic consumption, which dropped by 0.7% in February 2025 compared to the previous year. In anticipation of this, China’s State Council launched a plan on March 17, 2025, to boost domestic consumption.

- Third Reading

They are linked to the broader approach of President Donald Trump’s protectionist vision, which is an integral part of the “America First” principle and his campaign slogan across three election cycles: “Make America Great Again.” Trump views the U.S. economy as being exploited under globalization and the free flow of trade relations. Therefore, by imposing tariffs, he aims to reduce U.S. dependence on global markets in favor of strengthening the domestic market.

This also serves the goal of exerting pressure on China and the EU to secure greater U.S. interests in negotiations over trade agreements and transactions, and to ensure what Trump considers to be “fairness” in these dealings. On January 22, Trump described the EU as being “very bad for us.” In February 4, he emphasized, “If we can’t make a deal with China, then the tariffs will be very, very substantial.” On February 26, he declared, “The European Union was formed in order to screw the Unites States—that’s the purpose of it.” And on April 7, he again said, “The European Union has been very, very bad to us,” adding for emphasis, “They are screwing us on trade.”

Short History of Trump’s Tariffs

These tariffs are the largest in terms of increases, but they are not the first of their kind imposed by Trump. Since assuming office in 2025 for a non-consecutive second term, he has enacted a series of tariffs targeting Canada, Mexico, and China:

These tariffs are part of a broader context of prolonged trade escalation initiated during Trump’s first term, 2017–2021:

Trump also imposed several tariffs on Chinese goods in 2018 and 2019:

Possible Shockwaves Caused By Trump’s Tsunami of Tariffs

Many analyses and commentaries focus on the post-shock phase, questioning whether the U.S. and global economies can endure or recover from the impact of these tariffs. However, the shock of the tariffs goes beyond the movement of capital and international trade. It strikes at the very foundation of the capitalist economic system and its core principles, such as free trade, globalization, and the nature of economic relations between nations—particularly those with close partnerships.

Although Trump’s aim with the tariffs is to bring countries to the negotiating table to reach what he considers “fair” solutions, other nations view these negotiations as coercive—something they are not accustomed to, particularly in managing economic affairs. From this perspective, Trump’s decision on April 9 to suspend tariffs on countries that do not respond with retaliatory measures for 90 days offers these countries a chance to absorb the shock. It does not, however, eliminate the coercive nature of the negotiation. The move was primarily intended to stabilize the intense volatility that had gripped both global and American financial markets.

Trump himself appeared to acknowledge the concerns of a recession, telling CNN on March 9: “I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America.”

On April 8, the S&P 500 stock market index dropped by approximately 1.6%, losing nearly $6 trillion in market value, while the Dow Jones Industrial Average fell by 0.8%. U.S. crude oil prices (West Texas Intermediate) declined by more than $2, settling at $58.45 a barrel.

In Asian markets, Japan’s Nikkei 225 index dropped by 1.7% on April 9, South Korea’s KOSPI index fell by 1.3%, and Hong Kong’s Hang Seng index declined by 1%.

In Arab markets, Egypt’s main stock index, EGX 30, fell by 3.34% on April 7. On April 9, Qatar’s stock exchange dropped by 0.35% and Saudi Arabia’s main index fell by 1.82%.

This trajectory, in itself, is bound to generate a series of direct and indirect crises and repercussions. These include:

First: Fears of a U.S. Economic Recession

While Trump defends the recent market declines and describes the shock as expected and merely a temporary phase before recovery, concerns remain—and are even anticipated—regarding the short- and medium-term impact on the U.S. economy. Jamie Dimon, CEO of JPMorgan Chase, has predicted a potential economic recession. It also appears that the U.S. administration is preparing for such a scenario. Commerce Secretary Howard Lutnick stated that the tariffs are “worth it,” even if they lead to a recession.

President Trump is placing significant hope on the outcomes of negotiations with other countries. According to the White House, 70 countries have already begun negotiations with Washington over the tariffs.

second: Emergence of Internal Opposition Within the Administration

Several members of Trump’s administration and his advisors have expressed concern over the impact of the trade war and tariffs on the U.S. economy. Elon Musk openly criticized the tariffs and called on Trump to reverse them. This concern extends to key figures in the American financial and business elite, including some of Trump’s supporters. According to The Washington Post, many in this circle believe that the tariff increases are excessively high.

third: Starting a Global Trade War

Despite Trump’s decision to suspend tariffs on countries that do not respond with retaliatory measures, U.S.-China economic relations have entered a highly tense phase. Beijing responded by imposing equivalent tariffs on U.S. imports, prompting Trump to immediately raise tariffs on Chinese goods from 34% to 104%. In turn, China retaliated with tariffs of up to 84%. On April 8, Canada also responded by imposing counter-tariffs of 25% on certain U.S.-made vehicles.

The situation is becoming increasingly complex, especially if the EU follows China’s lead and decides to implement countermeasures against the U.S. tariffs. A proposal to impose a 25% tariff on American imports has already gained support among EU member states. European Commissioner for Trade and Economic Security Maroš Šefčovič confirmed that the EU intends to introduce retaliatory measures against the U.S. tariffs, while Italian Prime Minister Giorgia Meloni warned of a potential trade war between the EU and the United States.

fourth: Neutralization of UN Economic Organizations

The U.S. tariffs have significantly weakened the role of international economic and trade institutions—particularly the World Trade Organization (WTO), the World Bank, and the International Monetary Fund. President Trump has accused these organizations of contributing to China’s rise and economic expansion, claiming that they turned a blind eye to unfair Chinese practices such as forced technology transfers, intellectual property violations, and currency manipulation. Moreover, the United States officially ended its financial commitments to the WTO in March 2023.

fifth: A New Reality for Western Blocs

U.S. tariffs are creating a new reality for Western alliances, both military—such as NATO—and economic—like the G7. Western leaders have traditionally relied on these platforms to coordinate their positions on military and economic affairs. However, Trump’s unilateral approach has significant repercussions on U.S. partnerships. Amid already growing concerns over a sharp slowdown in economic growth across the continent, European economies, in particular, are expecting potential negative impacts stemming from the tariffs.

Finally, there appears to be a gap between the expectations of the U.S. administration and the reality that has emerged following its imposition of tariffs. The trajectory of both the American and global economies, as well as international trade relations, may spiral out of control in ways that are difficult to correct. Despite the temporary suspension of tariffs on countries that refrain from retaliatory measures, both the United States and China remain firmly committed to their retaliatory economic policies. This persistence alone could push the global economy into a dark tunnel of grim and uncertain scenarios.