...
By Gabe Whisnant and Sonam Sheth
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Wall Street tumbled to its worst week in five years as global markets brace for the impact of President Donald Trump's sweeping tariffs targeting nearly 200 countries.
The Context
Trump sent the market into a tailspin when he announced on Wednesday that the U.S. would impose a 10 percent "baseline" tariff on virtually all imports and singled out roughly 60 countries for what he described as "discounted reciprocal tariffs."
Read More on U.S.
What To Know
By market close on Friday, the S&P 500 index was down nearly 6 percent, bringing its total loss to 10 percent over the last two days. The Dow Jones Industrial Average was down 5.5 percent in its biggest decline since June 2020. The tech-heavy Nasdaq composite index lost 5.82 percent, bringing it down 22 percent from its December peak.
When Trump announced his tariffs, he said his administration's "reciprocal" tariffs were based on duties those countries imposed on the United States.
The numbers Trump cited, however, were inaccurate and the White House clarified later on that the formula it used was based on just two variables: the U.S.'s trade deficit with a foreign country divided by that country's exports to the U.S.
Trump then halved that number to arrive at his "discounted reciprocal tariff," which he said he was doing to be "kind."
...
The Washington Post also reported Friday that Trump himself came up with the formula, scuttling weeks of deliberations between officials across government agencies about how to set the tariffs while taking into account a wide range of tariff and non-tariff barriers and global trade practices.
Trump's formula was widely criticized by economists and financial journalists, who said it reflected a fundamental misunderstanding of trade policy and comparative advantage.
The tariffs—which Trump says will bring manufacturing jobs back to the U.S.—encompass a broad swath of countries: a 34 percent tariff on Chinese imports (in addition to a 20 percent tariff China already faces), 20 percent on the European Union, 25 percent on South Korea, 24 percent on Japan, 32 percent on Taiwanese goods and 26 percent on Indian imports.
Some of the world's poorest countries will also face some of the highest tariffs, including Lesotho (50 percent), Cambodia (49 percent), Vietnam (46 percent), Laos (48 percent) and more.
Trump insisted that markets will "boom" as a result of his trade war, despite the fact that Wall Street on Thursday experienced its worst day since 2020 and the U.S. dollar wiped out all its gains from Trump's reelection.
The White House's tariff move sparked backlash from leaders around the world.
China announced on Friday that it will retaliate with a 34 percent tariff on all U.S. imports, while the EU's trade commissioner said the tariffs are "damaging" and "unjustified," adding that the U.S.-EU trade relationship needs a "fresh approach."
Canadian Prime Minister Mark Carney slammed a 25 percent tariff on auto imports—which Trump had previously announced—that went into effect on Thursday and vowed to retaliate.
"We take these measures reluctantly," Carney said Thursday. "And we take them in ways that is intended and will cause maximum impact in the United States and minimum impact in Canada."
UK Prime Minister Keir Starmer struck a more measured tone and said the UK will continue working with the U.S. to reach a more equitable trade deal.
What People Are Saying
Emily Bowerstock Hill, CEO and founding partner at Bowerstock Capital Partners, told CNBC: "The bull market is dead, and it was destroyed by ideologues and self-inflicted wounds. While the market may be close to the bottom in the short-term, we are concerned about the impact of a global trade-war on long-term economic growth."
James Surowiecki, an economics reporter who was among the first to figure out Trump's tariff formula, wrote on X, formerly Twitter: "Even given that it's Trump, I cannot believe they said 'We'll just divide the trade deficit by imports and tell people that's the tariff rate.' And then they decided to set our tariffs by just cutting that totally made-up rate in half! This is so dumb and deceptive."
Arnaud Bertrand, an entrepreneur and the founder of HouseTrip, wrote on X: "This isn't something designed to address genuine trade issues, but simply a mechanism based on arbitrary math to punish countries for the affront of selling more to the United States than they buy."
What Happens Next
The 10 percent "baseline" tariff on all imports will kick in on Saturday and the "discounted reciprocal" tariffs targeting the U.S.'s biggest trading partners will take effect on April 9.
Update 04/04/25 4:56 p.m. ET: This story has been updated with additional information.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines