New round of ‘reciprocal’ tariffs targets 86 countries, rattling investors and trade partners
A sweeping new wave of tariffs imposed by US President Donald Trump came into force on Wednesday, with goods from 86 countries now subject to significantly higher import duties — including a 104% tariff on Chinese exports to the United States.
The tariffs, described by the administration as “reciprocal,” mark the most aggressive escalation of Trump’s long-running trade war and are among the steepest duties levied by any US administration in nearly a century. They include duties ranging from 11% to 84% across dozens of nations, with the baseline 10% universal tariff — imposed on most countries over the weekend — now superseded by tailored rates based on trade imbalances.
China hit hardest, vows to “fight to the end”
China is the primary target of the latest tariffs. The 104% rate is a cumulative figure comprising a previously imposed 20% duty, a 34% retaliatory measure, and a last-minute 50% increase signed by Trump late Tuesday. Beijing responded sharply, with the Commerce Ministry stating, “China will never accept it. If the U.S. insists on its own way, China will fight to the end.”
Chinese retaliation is already underway. A 34% counter-tariff on US goods is set to take effect Thursday, while the People’s Bank of China has allowed the yuan to weaken for a fifth consecutive day, dragging it to an all-time low against the US dollar. Chinese brokerages have reportedly been instructed to help stabilise domestic share prices.
China shipped US$439bn worth of goods to the US in 2024, remaining the second-largest foreign supplier despite years of rising tariffs. US exports to China totalled US$144bn.
Emerging markets and allies also caught in the crossfire
Among the hardest-hit after China is Lesotho, facing a 50% tariff on its exports, followed closely by Cambodia (49%), Laos (48%), and Vietnam (46%). India’s exports are now subject to a 26% duty, prompting the country’s central bank to cut interest rates by 25 basis points to 6% in an effort to cushion the blow.
South Korea, another key US ally, saw its benchmark Kospi index enter bear market territory, while its currency plunged to a 16-year low. Japan was slapped with a 24% duty and saw its Nikkei index fall more than 4% in early trading.
The European Union, which has sought to defuse tensions, received a 20% tariff. European Commission President Ursula von der Leyen called Chinese Premier Li Qiang urging restraint and warning against “further escalation”.
Wall Street and global markets spiral
The tariffs have triggered one of the deepest equity sell-offs in decades. The S&P 500 has lost nearly US$6tn in market capitalisation since Trump’s April 2 announcement, approaching bear market territory with four straight days of losses. The Nasdaq Composite dropped 2.15% on Tuesday alone, while futures signalled a fifth consecutive down day.
Asian markets resumed their slide on Wednesday. Taiwan’s TAIEX plunged nearly 6%, Hong Kong fell over 3%, and Australian shares were down sharply. Oil prices also slumped, with West Texas Intermediate closing below US$60 per barrel for the first time since April 2021.
Recession fears grow, inflation looms
JPMorgan now pegs the likelihood of a global recession by year-end at 60%, up from 40%. Economists warn that the tariffs function as a major tax increase on American households and businesses, with the nonpartisan Tax Foundation estimating that the average US consumer will pay an additional US$2,100 annually.
“Tariffs could ignite stagflation,” said Boston College economist Brian Bethune, pointing to rising prices combined with economic stagnation. He predicts inflationary effects will begin showing up in consumer prices by May, accelerating into June and July.
Goldman Sachs has raised the probability of a US recession to 45%, citing the unpredictability of the administration’s actions. “We had expected the White House to announce a more aggressive tariff at first and then scale it back somewhat,” the bank said in a note titled Countdown to a Recession.
Tailored deals promised, but clarity lacking
Trump has repeatedly described the tariffs as “permanent,” but also claimed they are driving nations to negotiate. “We have a lot of countries coming in that want to make deals,” he said Tuesday. That evening, he told Republican lawmakers that “countries are calling us up kissing my ass.”
The administration is in talks with Japan and South Korea, and Italian Prime Minister Giorgia Meloni is expected in Washington next week. Vietnam’s deputy prime minister is set to meet US Treasury Secretary Scott Bessent later Wednesday. Trump also signalled he may soon introduce “major” tariffs on pharmaceutical imports — one of the few categories not yet targeted.
Despite multiple countries offering to lower tariffs on US goods, progress on reciprocal agreements has been slow. Trump has rejected several offers to mutually cut tariffs to zero, citing concerns over non-tariff barriers like currency manipulation, tax regimes, and exploitative labour practices.
Long-term damage seen as hard to reverse
Even if the tariffs were withdrawn, much of the damage may be irreversible. “Trump’s actions have significantly hurt US credibility,” said Colin Grabow, associate director at the Cato Institute. “Businesses need a certain degree of certainty in which to operate, and Trump’s chaotic approach is not providing that.”
