Global tensions rise as market falls

Photo courtesy of Wikimedia Commons

Due to “Liberation Day” that President Trump has recently announced, over 90 nations are facing tariffs on goods exported to the United States.

The global financial community has been up in arms over the new tariffs imposed by the Trump administration, even against America’s supposed allies within the European Union. Building upon his previous tariffs on China, Mexico, and Canada, President Donald Trump announced further financial burdens to US trading partners, and even more on countries with higher trade deficits towards the US on Wednesday, Apr. 2. These rates were expected to be called into effect on Apr. 9.

Dubbed “Liberation Day,” the president has announced, as part of the country's new trade policy, a list of over 90 nations facing tariffs on goods exported to the United States. Although the trade plan was intended to encourage US citizens to purchase more American goods, it sparked outrage and retaliation from many affected nations instead. These nations now either have to raise prices or limit manufacturing altogether.

Many of those affected, including some of the largest economies, such as China and the European Union, have begun planning retaliations to protect their interests. Others, such as Japan and Ireland, have claimed that the tariffs will do nothing but harm the global economy and the people that depend upon it but have yet to announce any plans of retaliation. 

Some countries have been affected worse, with the highest rate supposedly placed on the “worst offenders.” For example, Taiwan faced a 32 percent rate, while Vietnam faced a whopping 46 percent rate, even though the former and latter account for only 3.2 percent and 4.2 percent of US imports overall, respectively. 

 It appears, however, that the tariffs have done little to benefit the American economy or its public. As measured by the Dow Jones Industrial Average, the stock market has fallen by over 2,000 points, effectively erasing $2.7 trillion from the market. The tariff announcement has also affected numerous other countries' stocks. The United Kingdom’s market index, the Financial Times Stock Exchange (FTSE) 100 index, has fallen almost 5 percent, its largest decline in five years, with France and Germany facing similar drops. Financial analysts warn that the economic upheaval could send many nations into a recession once the tariffs go into effect.

The US may not fare any better, as reports from the financial service powerhouse JP Morgan have indicated a 60 percent likelihood of a recession impacting the states. Even without going into recession, the impact of tariffs eventually being placed on the consumers— who will bear the costs  —could compound the already challenging economic conditions in the US, where high prices remain a persistent issue. This could also result in slower economic growth overall, leading to a situation of prices continuing to stay high or even rising while the economy falters, affecting businesses and consumers alike.

While the long-term impacts of the tariffs remain uncertain, Trump has stated that he is using the tariffs to create possible negotiations, with the US holding the power in these possible scenarios. So, while there might still be hope for avoiding this economic disaster, it may not turn out well for the world as a whole, potentially souring long-standing global relationships in the process.