The world economy is experiencing anxiety ahead of the "Liberation Day" announced by US President Donald Trump, in which he will introduce tariffs against multiple countries, risking global turmoil, to correct what he sees as unfair trade imbalances.
Trump, who has made unprecedented use of his presidential powers since taking office in January, is due to announce on Wednesday, 2 April, exactly what tariffs will be imposed and whether they will target entire sectors.
Uncertainty has already rattled markets, with the Nasdaq Composite technology index down more than 2.0% in New York.
Trump has insisted that reciprocal tariffs are needed because the world's largest economy is being "looted by every country in the world". But critics warn that the strategy risks a global trade war that could spark a chain reaction of retaliation from major trading partners such as China, Canada and the European Union.
Market jitters intensified after Trump said over the weekend that his tariffs would cover "all countries."
The Wall Street Journal reported Sunday that Trump's advisers are considering imposing global tariffs of up to 20 percent that would affect nearly all U.S. trading partners. Trump kept the vagueness, saying his tariffs would be "much more benign" than those already imposed on U.S. products.
"Economic pain"
Trump's fixation on tariffs is already stoking US fears of a recession. Goldman Sachs analysts have raised the likelihood of a 12-month recession from 20% to 35%.
This reflects "a lower growth forecast, falling confidence and statements from White House officials indicating a willingness to endure economic pain." Goldman Sachs also raised its forecast for underlying inflation at the end of 2025.
China and Canada have already imposed countermeasures on US goods, and the EU has unveiled its own measures due to take effect in mid-April. More countermeasures could be taken after 2 April.
Ryan Swift of Oxford Economics pointed out that "we should expect the unexpected", predicting that Trump will "take aim at some of the biggest offenders".
What ultimately matters is how far-reaching Trump's tariffs are and whether the tool is simply a negotiating tactic or part of changing the system.
In addition to reciprocal tariffs on countries, Trump could unveil additional sectoral levies on goods such as pharmaceuticals and semiconductors.
Earlier, he announced tariffs on automobiles that will take effect on Thursday, April 3.
Economists' expectations are that the upcoming salvo could target the 15% of partners that have persistent trade imbalances with the U.S. - a group that U.S. Treasury Secretary Scott Besant has dubbed the "Dirty 15."
The United States has the largest goods deficits with partner countries including China, the EU, Mexico, Vietnam, Taiwan, Japan, South Korea, Canada and India.
"Existential moment"
U.S. trading partners have been quick to minimize their exposure, with reports indicating that India may reduce some tariffs.
European Central Bank President Christine Lagarde expressed the view that Europe should strive for economic independence, telling France Inter radio that Europe was facing an "existential moment".
Separately, British Prime Minister Keir Starmer has held talks with Trump as part of "productive negotiations" to conclude a UK-US trade agreement, his Downing Street office said.
For his part, German Chancellor Olaf Scholz said the EU would respond firmly to Trump's tariffs, though he stressed the bloc was open to compromise.
"It's entirely possible" that the new tariffs will be quickly reduced or delayed, said Greta Paish, a partner at law firm Wiley Rein.
In February, high tariffs on Mexican and Canadian imports were suspended for a month after the two countries expressed willingness to negotiate.
"There are a lot of different scenarios: a delay while negotiations last, a potential reduction, or immediate implementation of the tariffs," said Paish, a former official with the Office of the U.S. Trade Representative. | BGNES, AFP
