In a bold move, US President Donald Trump has issued a stern warning to foreign governments, stating they will need to pay “a lot of money” to lift extensive tariffs, which he has described as necessary “medicine.” This declaration has sent shockwaves through global financial markets, resulting in a significant downturn.
Asian stocks fell sharply, and US stock market futures showed a steep decline as investors expressed concern that these tariffs could drive prices up, weaken demand, and ultimately lead to a potential global recession. As President Trump addressed reporters aboard Air Force One, he appeared unfazed by the substantial losses that have already eroded trillions in equity market value worldwide. “I don’t want anything to go down. But sometimes, you have to take medicine to fix something,” he remarked after a weekend of golfing in Florida.
“They are coming to the table. They want to talk, but there’s no talk unless they pay us a lot of money on a yearly basis,” Trump asserted, reinforcing his stance on the matter.
A board displaying stock prices at the Taiwan Stock Exchange in Taipei
The recent wave of tariffs introduced by President Trump has sparked significant controversy, eliciting condemnation from global leaders and retaliatory actions from China, the world’s second-largest economy. Billionaire investor Bill Ackman, who previously supported Trump’s presidential bid, urged for a pause on these tariffs, warning against what he termed an “economic nuclear war.”
Market participants and political leaders are currently grappling with whether these tariffs represent a permanent shift in policy or merely a strategic negotiating ploy to extract concessions from foreign nations.
<strong>Read More:</strong>
- <a href=”#latest-developments”>Live: Follow the latest developments as markets react</a>
- <a href=”#eu-response”>EU response to Trump tariffs could amount to €400bn</a>
- <a href=”#implications”>EU countries left grappling with implications of US tariffs</a>
On US talk shows yesterday, top economic advisors to the president sought to frame the tariffs as a strategic repositioning of the United States within the global trade hierarchy. Treasury Secretary Scott Bessent noted that over 50 nations have initiated negotiations with the US since the tariff announcement last week, while Commerce Secretary Howard Lutnick indicated that the tariffs would persist “for days and weeks.”
Japan, a key ally of the US in Asia, is among the nations eager to negotiate a resolution. However, its leader, Shigeru Ishiba, cautioned that tangible results would “not come overnight.” Investors, however, appear to be growing impatient, as evidenced by the plunge of Tokyo’s Nikkei to a one-and-a-half year low, primarily influenced by a significant drop in the market values of major banks.
The broader market sell-off, which included a steep decline in global oil prices, reflects investors’ anxieties regarding a looming recession, leading to speculations that the US Federal Reserve may lower interest rates as early as May. White House economic adviser Kevin Hassett sought to allay fears that the tariffs were being used to politically pressure the Federal Reserve, stating there would be no efforts at “political coercion” of the central bank.
JP Morgan economists have revised their forecasts, now estimating that the tariffs could result in a 0.3% decline in US gross domestic product (GDP) for the year, a sharp departure from earlier projections of 1.3% growth. Similarly, Goldman Sachs anticipates that the tariffs might lower China’s GDP growth by at least 0.7 percentage points in the current year, accelerating the potential for fiscal easing. The two Wall Street giants now assess the likelihood of a global recession at 60% and 45%, respectively.
This environment of uncertainty has created a murky outlook for global policymakers. The Reserve Bank of New Zealand, the first major central bank to convene since Trump’s announcement on tariffs, is expected to cut rates in what economists believe could be the first of several reductions this year.
On Saturday, US customs agents began enforcing Trump’s unilateral 10% tariff on imports from various countries. Higher “reciprocal” tariff rates ranging from 11% to 50% will commence on Wednesday. Nevertheless, some governments have expressed a willingness to engage with the US to avoid these tariffs.
Taiwan’s President Lai Ching-te proposed a zero-tariff framework as the groundwork for discussions with the US, promising to eliminate trade barriers while encouraging Taiwanese companies to increase their investments in America. Meanwhile, Israeli Prime Minister Benjamin Netanyahu indicated he would seek a reprieve from a 17% tariff on Israeli goods during his meeting with Trump scheduled for today. An Indian official revealed that the country does not plan to retaliate against a 26% tariff and is in talks with the US for a potential agreement. Additionally, Vietnamese leader To Lam agreed in a recent phone call with Trump to explore a deal aimed at lifting tariffs after the Southeast Asian manufacturing hub faced some of the highest tariffs globally. Trump characterized this dialogue as “very productive.”
In navigating these complex economic discussions, it is evident that the global trade landscape is shifting rapidly, with leaders from various nations seeking collaborative approaches to mitigate the impacts of tariffs and maintain economic stability.
Edited by Ali Musa
Axadle Times International–Monitoring.
