President Donald Trump’s “liberation day” tariffs officially came into effect on Wednesday morning, including a 104 per cent tariff on Chinese goods.
US President, Donald Trump, has followed through with the threat to impose hefty tariffs on China, after Bejing introduced a 34 per cent reciprocal tariff in an escalating trade war which has left markets reeling.
The rate is an increase of 50 per cent on the original tariff of 54 per cent announced for the Chinese market. In response to the threat of escalation, China’s commerce ministry accused the US of “blackmail,” describing the threatened hike as “a mistake on top of a mistake.”
The country said it would “resolutely take measures,” adding: “China will fight to the end if the US side is bent on going down the wrong path.”
Delivering on that promise on Wednesday afternoon, China retaliated with an 84 per cent tariff on US imports, to take effect on Thursday.
However, in an upbeat message posted to his platform Truth Social on Tuesday night, Mr Trump said that trading partners want to negotiate deals with the US in the wake of the tariffs. Writing on the website on Tuesday, the US President claimed: “China also wants to make a deal, badly, but they don’t know how to get it started. We are waiting for their call. It will happen!”
Exports from the European Union are now subject to a 20 per cent tariff, while the UK is subject to 10 per cent tariffs. The surge in tax duty has caused alarm, particularly seeing as EU exports to the US have risen significantly over the last 15 years – going from 15 per cent of Europe’s total exports to the rest of the world to over 20 per cent. Exports to the US represent roughly five per cent of EU GDP.
Meanwhile, Japan, South Korea, Vietnam, Cambodia and Taiwan are among key Asian countries who are hoping to speak with the Trump administration about tariffs, as some now face up to 49 per cent on goods imported to the US.
“I’m telling you these countries are calling us up, kissing my ass,” he told the audience at Tuesday night’s Republican dinner. “They are dying to make a deal.”
Later today, EU member states are set to approve a comprehensive list of US products that will face tariffs from next week in response to President Trump’s initial 25 per cent import tax on European steel and aluminium announced last month.
From next week, the EU plans to impose 25 per cent tariffs on a list which is initially expected to include luxury boats, orange juice, and motorbikes. Lobbying from Europe’s wine industry saw some products dropped from the original EU list – including American bourbon, wine and dairy. The European tariffs will be imposed in three stages, with a second stage – expected to feature eggs, poultry, leather goods, textiles and dental floss, to take effect from the middle of May. From December, it is expected that counter-tariffs will be slapped on almonds and soybeans – the latter makes up the biggest value for US exports to Europe.
During Tuesday night’s dinner, Trump re emphasised his plans for a “major” tariff to be imposed on all pharmaceutical imports. Mr Trump did not specify when and by how much he intends to raise taxes on pharmaceutical imports, with medicines having been previously exempt from tariffs, per White House documents.
Pharmaceutical stocks fell in the early hours of Wednesday – with British vaccine manufacturers AstraZeneca among the biggest losers in London, down over four per cent. Novo Nordisk, the company which produces Ozempic and Wegovy, saw stocks fall by roughly five per cent in Copenhagen, while a swing in stocks also affected the German biotech firm Sartorius, which dropped around five per cent.
Mr Trump has insisted that the major tariffs will incentivise drug companies to move their operations to the US. In a statement which coincided with “liberation” day, the White House signalled that it was delivering on promises to “make America wealthy again.”
“This is one of the most important days… in American history; it’s our Declaration of Economic Independence,” the White House said last week in a statement quoting Mr Trump. “For years, hard-working American citizens were forced to sit on the sidelines…But now it’s our tine to prosper.”
On Tuesday, the White House posted a video of coal miners at the White House who said they believed that the tariffs were a good thing, which will bring jobs back to America and incentivise companies to invest money and infrastructure in American jobs.
“The fake news media’s latest orchestrated attack – this time over tariffs – falls flat with coal miners who told us: “It’s actually gonna help our industry out and bring jobs back to America,” the White House said.
Across the world, stock markets plunged as the tariffs went into effect, with the FTSE 100 falling by more than 2.3 per cent in London, while in Tokyo, Nikkei closed down 3.9 per cent. Germany’s finance minister, meanwhile, warned that its economy – the largest in Europe – was at increased risk of recession as the country’s benchmark Dax index dropped 2.1 per cent.
As the world grappled with the impact of the highest level of US tariffs seen since the early 20th century, the Hang Seng in Hong Kong fell by as much as 4.3 per cent, having suffered its worst day since 1997 earlier in the week. While European shares closed higher on Tuesday, they dropped again after hopes Mr Trump would make a deal with China failed to come to fruition.
US SUPPORT ‘REMAINS ESSENTIAL’ TO IRELAND
Ireland is one of the countries with most to fear from Mr Trump’s tariffs, according to economists and experts. The mutually beneficial US-Ireland economic relationship supports over 400,000 jobs on both sides of the Atlantic.
US exports and tech make up a fifth of Ireland’s GDP, with over 10 per cent of Irish workers employed by mainly US-owned multinational companies in the pharmaceutical and technology sectors, which were drawn to Irish shores due to the low corporate tax rate. Aside from the EU, the US is our largest export market.
“This is without question the most serious issue to face the Irish economy in a long time,” Taoiseach Micheál Martin recently told the Dail. It comes as Tánaiste Simon Harris is in Washington D.C. for a series of key meetings with political and business figures, including Secretary of Commerce Howard Lutnick and Republican and Democratic members of the House and Senate.
Ahead of the visit, Mr Harris said that US support “remains essential.”
The Tánaiste said: “We are here to keep the lines of communications open with US political and business leaders as well as share insights and engage. During the visit I will be emphasising our desire to find a negotiated solution between the EU and US on tariffs and that I am fully supportive of Commissioner Šefčovič’s work.
“I will make the point that the European Union is ready right now to negotiate. We have a team on standby to travel to D.C. to begin negotiations between the EU and the US to find a way forward.
“In a complex and unpredictable global economic environment, direct bilateral engagement with the United States is one of my priorities. A particular focus of discussions will be the transatlantic economic and trade relationship between Ireland, the EU and the United States. I hope the trip will provide for an opportunity to gain further insight into the administration’s thinking on their next steps.”