Trump's tariff regime takes effect, sending markets tumbling
By Abigail Townsend
Date: Wednesday 09 Apr 2025
(Sharecast News) - Donald Trump's sweeping tariff regime came into force on Wednesday, including a swingeing 104% on China, unnerving markets and pushing the world to the brink of an all-out trade war.
Dozens of countries, including a number of traditional trading partners, have had so-called reciprocal tariffs imposed on them by Washington, the highest in decades.
China's record rate was announced after Beijing refused to rule out retaliatory levies on US products.
The tariff regime, first announced on 2 April, has caused carnage on global markets, sending both equities and oil tumbling.
Equity markets rallied yesterday following days of falls, but Asian markets slumped once again overnight as the tariffs took effect.
Japan's Nikkei 225 close down 4%, although Chinese stocks saw smaller falls, on hopes that Beijing would step in to support the market.
China's blue chip CSI 300 Index closed 1% stronger while Hong Kong's Hang Seng also finished in the green, up 1%.
Benchmark Brent crude, meanwhile, had lost nearly 4% by 0700 BST, at $60.57 a barrel. WTI was also 4% lower, at $57.22.
Trump acknowledged the tariffs had been "somewhat explosive". But he insisted: "After years of being ripped off, it's America's turn to do the ripping." He also said countries remained keen to negotiate trade deals with Washington.
But the regime has sparked fears that the US will see a spike in inflation and be pushed into recession, while the global economy slows sharply.
A number of countries are also now considering retaliatory tariffs.
The European Union will vote later on Wednesday on potential counter measures, after its 20% tariff came into effect alongside a previously announced 25% levy on steel, aluminium and cars.
The European Commission's technology commissioner Henna Virkkunen said: "We want to negotiate. We don't want to have tariffs, we don't have to have a trade war.
"When needed, we also have to protect our industry and our citizens. And we are currently preparing those measures."
China, meanwhile, has already vowed to "fight to the end". Beijing was understood to be discussing ways of shoring up the domestic economy on Wednesday.
The UK, meanwhile, reiterated its desire to secure a trade deal.
Russ Mould, investment director at AJ Bell, said: "Tuesday's fragile recovery in stocks has been shattered by renewed selling reciprocal tariffs on what the Trump administration regards as the worst offenders comes into effect.
"Investors had initially taken some positives from a willingness in the White House to negotiate with Japan and Israel, but an escalation with China triggered another sell-off on financial markets. US consumers buy a lot of goods from China, so the 104% tariff could stoke inflation big time."
Rabobank said on Wednesday: "Volatility and the huge size of market swings remains the theme.
"If Trump were to reverse course...this may serve to mollify the current market panic, but is unlikely to prevent a slowdown. Such a move would underline the unpredictability for the current policy environment which itself is a negative for confidence and risk appetite."
Kathleen Brooks, research direct at XTB, said: "Trump's dwindling number of Wall Street supporters have been saying that he is using his skills from The Art of the Deal when trying to shift the US's trade deficit.
"That might work if you run a real estate business, however, when it comes to running a country, it helps to be upfront and diplomatic from the start."
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