Sharjah24 - AFP: President Trump’s broadest set of tariffs to date came into force on Saturday, marking a dramatic shift in U.S. trade policy that is expected to provoke retaliation and heighten global economic tensions. A 10 percent baseline levy now applies to the majority of U.S. imports—excluding those from Mexico and Canada—under emergency economic powers invoked to address the country’s persistent trade deficits. According to the White House, these deficits stem from an imbalance in reciprocal trade relationships and high value added taxes abroad.
Approximately 60 trading partners—including the European Union, Japan, and China—will face higher, economy-specific tariff rates. In anticipation of the U.S. measures, China has already announced matching 34 percent duties on American products and plans to file a complaint at the World Trade Organization, while also restricting exports of rare earth elements critical to advanced technologies.
Market reaction
Financial markets reacted sharply, with Wall Street joining Asian and European markets in steep declines as economists warned that rising import costs could slow growth and stoke inflation. Despite the market turmoil, the administration has signaled that its approach to tariffs will remain unchanged.
Temporary exemptions
Several key industries have been temporarily exempted from the new levies, including steel, aluminum, automobiles, copper, pharmaceuticals, semiconductors, lumber, certain critical minerals, and energy products. Nonetheless, investigations into additional sectors could lead to further duties in the coming months. Canada and Mexico remain outside the baseline tariff regime, subject instead to separate duties under North American trade agreements.
Response from affected countries
While the staggered implementation schedule allows time for negotiation, observers caution that countries unable to secure exemptions are likely to respond in kind. The EU, facing a 20 percent tariff, has pledged a coordinated and phased response if talks fail, with proposals under consideration to target U.S. technology firms. Japan has called for calm, pragmatic dialogue after being hit with 24 percent tariffs on its exports.
Impact on Southeast Asia
Meanwhile, Southeast Asian exporters such as Vietnam are bracing for extraordinary 46 percent U.S. duties. Additional levies on Chinese goods will push the total U.S. tariff on those imports to 54 percent by April. Early this week, 25 percent auto tariffs also took effect, prompting some automakers to halt production at North American plants.
Historical context
These measures represent the most extensive U.S. tariff increase since the Smoot-Hawley Act of 1930. Analysts estimate that the average effective U.S. tariff rate will rise to 24 percent, exceeding levels last seen during the Great Depression.
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