Shockwaves continue to be felt across the globe following Donald Trump’s decision to unleash a slate of import tariffs on all trade with the country.
Dubbed “Liberation Day” by the US president, all nations were included in the sweeping measures – with the UK hit by a 10 per cent tariff on all exports to the United States as Mr Trump pledged America “will no longer be ripped off”.
European Union nations face a steeper 20 per cent, while China will pay 35 per cent and Cambodia as much as 49 per cent. Switzerland was also hit hard with 31 per cent, Taiwan, faces 32 per cent and India has been handed a 26 per cent levy.
The EU is preparing to retaliate to the first round of tariffs, reportedly drawing up a list of US goods to be hit with a 25 per cent tariff. The bloc says it will deliver a “timely, robust and calibrated” response to the announcement.
Meanwhile, China has now imposed a 35 per cent tariff on imports from the US, matching the Trump administration’s initial figure.
The sudden and dramatic international fallout has had repercussions on several global markets and products, with consumers and investors showing uncertainty over the future.
Here are some of the key impacts in four charts:
Stock markets
Stock markets have reacted very negatively to the measures, seeing stark drops in indices across the board. Some analysts have warned the sudden dip could lead to a global recession as in 2020, or even 2008.
Dan Coatsworth, investment analyst at AJ Bell, told The Independent: “The sweeping tariffs have caused considerable pain to investors, so far wiping $8.27 trillion (£6.44 trillion) off the value of the global stock market since the Liberation Day speech. No one knows with certainty if there is more pain to come.
“Last week saw big declines, yet areas such as defensive stocks, US Treasuries, gold and bitcoin held up until Friday afternoon. Selling across financial assets was widespread earlier today – which implies that investor fears are getting worse.
“Some would read this as the market reaching the contagion stage, where investors are liquidating everything they can. It wouldn’t be a surprise to see this phase followed by a wave of contrarian investors buying on the dip, snapping up assets while they are going cheap.
“Others might read the situation in a different way, suggesting the sell-off in defensives and beyond implies more bad news to come. We can look back at previous market shock events including Covid, the global financial crisis and inflation stress in the 1970s, and see that recovery periods were variable: some short, some long and painful.”
Currency
The impact of Mr Trump’s tariffs on international currencies is more of a mixed picture, and the US president will no doubt call the small rebound in the dollar a success.
Although the UK is somewhat more isolated than other nations from the worst impacts – and managed to attract only the lowest tariff amount – the value of the pound has still dropped following Liberation Day.
Laith Khalaf, of investment platform AJ Bell, said: “Supply chain disruption could also lead to price spikes which feed through into consumer prices. The UK’s reaction to the imposition of tariffs also matters. Should the UK impose its own tariffs on imported US goods, that could push the inflationary dial upwards. If that happens, markets might well start to walk back on the rate cuts they’re expecting.
“As the Bank of England said in its February monetary policy report, ‘while tariffs are likely to lower UK economic activity, the overall effect on UK inflation is unclear’. This highlights the difficulty in predicting the fallout from a trade policy as wide-ranging as that announced by President Trump. It’s still early days and markets are digesting an enormous shift in US economic policy.”
Oil
Oil prices have plummeted in response to Trump’s announcement, promising a mixture of positive and negative side effects. Prices slumped to their lowest level since April 2021 on Monday, with little signs of an immediate recovery.
The price of oil is a key factor in many inflationary calculations, meaning the sudden drop may well see a drop in headline inflation figures in several economies. Another more obvious benefit will be for drivers who will find it cheaper to fill up their cars in the near future.
Simon Williams, head of policy at the RAC, said: “With oil tumbling to its lowest price for four years, drivers ought to see cuts of up to 6p a litre at the pumps ahead of the notoriously busy Easter weekend on the roads.
“As long as the barrel carries on trading around or below the $65 mark, retailers will be obliged to pass on the savings they’re benefiting from to their customers on the forecourt.
“Petrol should drop from its current UK average of 136p to 130p a litre and diesel from 143p to 137p. If unleaded were to fall to that level, it would be the cheapest since summer 2021. Diesel hasn’t been that low since September that year.”
But low oil prices also mean there is less incentive for producers to bring as much of their product to the market. The industry is a massive economic driver that fuels businesses across the globe, so any downturn in activity is bound to have a knock-on effect on economies.
Gold
Finally, gold has seen a slight drop off following Liberation Day but still seems unstoppable following massive rises in recent months.
The Gold Bullion Company managing director Rick Kanda said: “President Trump’s tariff war is evidently causing economic uncertainty, which is, in turn, concerning buyers. Buyers from the United States are opting to move their holdings overseas, which is creating obstacles and rising gold prices. Buyers are worried about the gold shortages this might cause; however, movements of holdings between banks are just organised relocation of vaulted gold, and buyers shouldn’t view this as an actual supply crisis.
“The leading cause of this shift in gold holdings is an increase in demand for physical gold rather than cash. In the past, certain gold investments, like ETFs, where you invest in gold but don’t actually own the physical product, were usually settled in cash.
“However, the shift in buyers wanting their physical gold and not cash has added pressure and logistical challenges to physical supply, leading to price increases. Trump’s tariff war has caused economic uncertainty, making gold more attractive than cash in the eyes of investors.”
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