One of the hallmarks of President Donald Trump’s second term thus far has been his relentless import tariffs on dozens of countries around the globe. From his initial executive order levying tariffs on China, Mexico and Canada to his continuation to do so on almost 100 total nations, the President has initiated significant change in terms of the American and global economies, the U.S. stock market and the nation’s people.
Tariffs, as defined by BBC, are taxes charged on imports from foreign nations, and are typically depicted as a percentage of a product’s price (ex. 10% tariff, 20% tariff).
When the White House first announced sweeping 25% tariffs on Mexican and Canadian goods and 10% tariffs on Chinese goods on Feb. 1, the American public were taken aback, as these countries are some of the country’s most significant trading partners, report CNN.
The overarching philosophy behind such sweeping tariffs is grounded in the hope that U.S. consumers will be encouraged to buy more American-made, ultimately working to boost the domestic economy, reports CNN.
Since his initial announcement in February, the Trump administration’s issuing of tariffs has only escalated. On April 2, a day which he dubbed “Liberation Day,” the President announced a set of so-called “reciprocal” tariffs on nearly one hundred nations. At the lower end, 21 nations were tariffed a standard 10%; at the higher end, Vietnam was tariffed as high as 46%, with China trailing at 34%, according to the sign the President exhibited at his speech.
“NOBODY is getting ‘off the hook’ for the unfair Trade Balances, and Non Monetary Tariff Barriers, that other Countries have used against us, especially not China which, by far, treats us the worst!” the President posted to Truth Social on April 13.
However, the Trump administration’s imposition of such severe economic policy has not been without international response. Rather, several nations have levied tariffs of their own on American goods, not the least of which being China. Last Wednesday, April 9, China’s President Xi Jinping announced retaliatory tariffs on the U.S. of 84%, and then on Friday, Apr. 11, he raised the rate to a whopping 125%, reports CNN. That latest increase was likely responding to President Trump’s own increase of the Chinese tariff rate to 145%. This back-and-forth approach to economic policymaking underscores the ongoing and intensifying trade war between the world’s two largest economies.
Domestically, the White House’s extensive tariffs have incited economic turmoil, especially in terms of the stock market. According to CNN, as of Sunday, April 6, the S&P 500– an index which tracks the performance of 500 of the largest public companies in the US, and is thus an important indicator of the market overall– had lost 15% of its value since Trump’s second inauguration. On Monday, April 7, the S&P balanced on the verge of a bear market– meaning it had dipped 20% below a recent peak, reports the U.S. Bank.
The stock market’s sudden tumble shocked not only those on Wall Street, but also citizens who had invested in both publicly-traded American companies, as well as those holding government bonds. The wavering stock market reflects the gravity of the ongoing trade war situation between China and the U.S., reports CNN.
However, temporary reprieve from the tariffs have had promising economic effects. Last Wednesday, April 9, the President announced a 90-day pause on his “reciprocal” tariffs for all nations, instead enforcing a standard 10% rate for those countries, reports The New York Times. While Chinese goods overall were not included in this exemption, and thus retained the 145% rate, Chinese technological goods– such as smartphones and computers– were exempt from this astronomically high rate, according to CNN. Such an exception boosted the stocks of American companies Apple and Nvidia, both of whom rely on critical trade with China, according to Yahoo Finance.
This brief break of tariff enforcement enjoyed by many countries and certain Chinese goods have already induced a slow but sure recovery for American stocks. From last Wednesday, April 9, to last Monday, April 14, the S&P 500 rose about 10%, according to Yahoo Finance. While seemingly a modest increase, this development exhibits the positive impact that the President’s pause in his tariff policy is already having.
Despite this, the success that this economic upturn suggests still remains uncertain. At the end of the 90-day long break, it is assumed that the Trump administration will reintroduce their unforgiving tariff rates on the country’s trading partners. Additionally, the White House has promised to levy strong tariffs on Chinese technological goods, ending their exempt status from the extreme tariff rate, reports CNN.
Of the many executive orders that have been issued this presidential term, the Trump administration’s tariff policies have been some of the most reported on, consequential, and controversial. While much economic tumult has already resulted from the tariffs, it still remains to be seen what their long-term consequences are, and whether they will ultimately benefit American industries or further strain global trade relationships.
