Donald Trump’s new tariffs, including a 104% duty on Chinese goods, have now been implemented, intensifying the global trade war. These reciprocal tariffs on imports to the US come as the president’s levies have caused a significant disruption in the global trading system, leading to fears of a recession and a decline in stock markets worldwide.
The S&P closed below 5,000 for the first time in nearly a year and is nearing a bear market, with companies losing trillions in stock market value since the tariffs were announced. Asian markets also experienced a sell-off, with Japan’s Nikkei down over 3%.
Trump nearly doubled duties on Chinese imports in response to counter-tariffs from Beijing, prompting China to vow to fight back. While Trump has indicated that the tariffs are permanent, he also mentioned that other countries are looking to negotiate deals.
The impact of these tariffs extends beyond just China, with Indian pharmaceutical stocks falling due to Trump’s plans to impose tariffs on all pharmaceutical imports. The US and China are on the brink of a full-blown trade war, with other countries also facing potential retaliatory tariffs.
As the global economy faces uncertainty amid these trade tensions, experts warn of higher inflation and the risk of a recession. The New Zealand Reserve Bank has already cut interest rates in response to the economic turmoil caused by the tariffs. With countries worldwide bracing for the fallout from these new tariffs, the world economy is facing a period of heightened uncertainty and volatility.
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