Global Trade War Escalates as US Tariffs Trigger Retaliation

Countries around the world are preparing to escalate a trade war with the United States after President Donald Trump announced sweeping tariffs, igniting fears of rising consumer prices and global economic disruption. The aggressive trade measures have already sent shockwaves through financial markets and drawn strong condemnation from international leaders.

Trump’s new tariff policy, unveiled on Wednesday, includes a 10% baseline duty on all imports and significantly higher levies on major trading partners. The move marks the highest trade barriers imposed by the US in over a century, affecting everything from consumer electronics to automobiles. Analysts warn that the price of goods, including Apple’s iPhone, could rise sharply, with projections suggesting the iPhone 16 Pro Max could cost nearly $2,300 (Dh8,448) if the added costs are passed on to consumers.

The White House has sent mixed messages about whether these tariffs are permanent or merely a negotiating tool. Trump himself stated that the tariffs “give us great power to negotiate,” suggesting they could be leveraged for trade concessions.

Retaliation and Global Response

In response to the tariffs, several countries have vowed retaliatory measures. China announced a 54% tariff on US imports, while the European Union imposed a 20% duty on American goods. French President Emmanuel Macron called for a temporary suspension of European investments in the United States. Meanwhile, Canada, Japan, South Korea, Mexico, and India have opted to hold off immediate countermeasures while seeking diplomatic resolutions.

Canadian Prime Minister Mark Carney criticized the US move, saying, “The United States has abandoned its historic role as a champion of international economic cooperation.” Japan’s Prime Minister Shigeru Ishiba labeled the situation a “national crisis,” while the International Monetary Fund (IMF) warned that the tariffs could destabilize an already sluggish global economy.

Market Reaction and Economic Concerns

The announcement triggered a sharp decline in global markets. On Thursday, the Dow Jones Industrial Average dropped nearly 4%, marking its worst one-day percentage decline since June 2020. The S&P 500 plummeted nearly 5%, and the tech-heavy Nasdaq saw its steepest drop since March 2020, losing nearly 6%. Major US companies reliant on overseas production, including Apple and Nike, took significant hits, with Nike shares losing 14% and Apple shares falling 9%.

In Asia, Japan’s Nikkei index continued its downward slide, dropping another 1.85% on Friday following a 2.8% decline the previous day. Chinese markets remained closed for a holiday.

Future Implications and Uncertainty

The US tariffs are set to take effect on April 9, leaving room for potential negotiations. However, the Biden administration has indicated that it will not back down. US Commerce Secretary Howard Lutnick and trade adviser Peter Navarro insisted that the tariffs are not merely a bargaining tactic but a definitive policy shift.

Vice President JD Vance defended the tariffs, arguing they are essential for national security and domestic manufacturing. “This is about making the things we need, from steel to pharmaceuticals,” Vance said in a Newsmax interview.

Economists warn that the tariffs could accelerate inflation, increase recession risks, and cost American families thousands of dollars in higher expenses. Additionally, they may alienate key US allies in Asia, complicating diplomatic relations and security partnerships. Japan, South Korea, and Taiwan—all home to significant US military bases—have been hit with tariffs ranging from 24% to 32%, while Canada and Mexico continue to face existing trade barriers.

As the global trade war escalates, markets and businesses brace for further uncertainty, with world leaders closely watching how the situation unfolds in the coming weeks.