U.S. President Donald Trump stated on Monday that he plans to be "highly lenient" with trading partners as he announces additional tariffs later this week, despite potential worldwide disruption, aiming to tackle perceived inequitable trade practices.
Since assuming office in January, Trump has been utilizing presidential powers in an unparalleled manner. He stated that he might reveal as soon as Tuesday evening the specific reciprocal tariffs that will be implemented.
The wealthy Republican maintains that mutual actions are necessary since the largest global economy has been "exploited by every nation around the globe." He also pledges a day of liberation for the United States.
However, he informed journalists on Monday: "We will be quite gentle, comparatively speaking, we'll be rather kind."
Experts caution that this approach could spark a worldwide trade war, leading to cascading counteractions from key trading nations such as China, Canada, and the European Union.
So far, China, South Korea, and Japan have committed to enhancing free trade among their countries.
But Trump said he was not worried that his action would push allies toward Beijing, adding that a deal on TikTok could also be tied to China tariffs.
The White House Press Secretary Karoline Leavitt stated on Wednesday that the aim was to introduce "tariffs based on countries." However, President Trump continues to support implementing additional sector-focused levies as well.
The uncertainty has jolted markets with key European and Asian indexes closing lower, although the Dow and broad-based S&P 500 eked out gains.
The market unease escalated after Trump stated on Sunday that his tariffs will encompass "all countries."
According to The Wall Street Journal, advisors have discussed implementing worldwide tariffs as high as 20%, affecting nearly all U.S. trade allies. However, President Trump has been unclear about the specifics, merely stating that his proposed tariffs will be "much more moderate" compared to those currently imposed on American goods.
'Economic pain'
Trump's fixation on tariffs is fanning US recession fears. Goldman Sachs analysts raised their 12-month recession probability from 20 percent to 35 percent.
This reflects a "lower growth forecast, falling confidence, and statements from White House officials indicating willingness to tolerate economic pain." Goldman Sachs also lifted its forecast for underlying inflation at the end of 2025.
China and Canada have introduced retaliatory tariffs on American merchandise, whereas the European Union announced its plans for similar actions beginning around mid-April. Meanwhile, Vietnam stated that it had reduced import taxes on various items such as vehicles, liquefied natural gas, and certain farm produce.
Japan has said it will set up around 1,000 "consultation centres" for businesses hit by US tariffs.
For now, IMF chief Kristalina Georgieva said at a Reuters event Monday that Trump's tariffs are causing anxiety, although their global economic impact should not be dramatic.
Ryan Sweet from Oxford Economics cautioned to "be prepared for surprises" and predicted that Trump would likely target "some of the biggest violators."
In addition to mutual country tariffs, Trump might introduce extra taxes targeted at specific sectors such as pharmaceuticals and semiconductors. Previously, he declared auto tariffs which were set to be implemented on Thursday.
Economists anticipate that the next round might focus on the 15 percent of partners who maintain consistent trade deficits with the United States, a category labeled as the "Dirty 15" by U.S. Treasury Secretary Scott Bessent.
The United States has some of its biggest goods deficits with China, the EU, Mexico, Vietnam, Taiwan, Japan, South Korea, Canada and India.
'Existential moment'
US trading partners are hurriedly working to reduce their reliance, as reports indicate that India could decrease certain tariffs.
Christine Lagarde, the President of the European Central Bank, stated on Monday that Europe needs to strive for economic self-sufficiency. She expressed this view during an interview with France Inter radio, describing Europe as being at an “existential juncture.”
Individually, British Prime Minister Keir Starmer discussed “fruitful talks” for a potential UK-US trade agreement with Trump, whereas German Chancellor Olaf Scholz mentioned that the EU would react strongly to Trump’s actions yet remains willing to find common ground through negotiation.
Greta Peisch, who previously served as an official at the US Trade Representative's office, stated that it is "completely feasible" for new tariffs to be quickly decreased or suspended.
In February, Washington temporarily halted significant tariffs on imports from Mexico and Canada for a month while their North American neighbors engaged in talks.
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