Cover Story: How Trump’s Tariff Whiplash Shook Global Trade in Seven Days

The week witnessed significant upheaval in global trade due to President Trump's abrupt tariff actions, which threatened established trade rules and created economic turmoil [para. 1]. Initially, the U.S. implemented "reciprocal tariffs" on April 9 with a 10% baseline rate and higher rates on 64 countries, including a 104% levy on China [para. 2]. However, within 12 hours, Trump paused the higher tariffs for most countries for 90 days, except for China, whose tariff was further raised to 125% [para. 3]. This reversal unsettled global markets and trading partners like the EU and Canada, further fueling fears of a chaotic trade war [para. 4].

Trump's tariffs created a highly complex trade environment, with a 25% tariff on steel and aluminum introduced in March, followed by similar tariffs on autos and proposed levies on critical sectors like pharmaceuticals and energy [para. 5]. Economists, including Jan Hatzius of Goldman Sachs, estimate that effective U.S. tariffs have risen by as much as 15% [para. 5][para. 6]. British Prime Minister Keir Starmer remarked that this shift signals a departure from established trading norms, emphasizing alliances and deals over rules [para. 7].

The market response was dramatic. On April 2, Wall Street lost $3.1 trillion in market value, and by April 9, European and Asian markets saw substantial declines, with Vietnam's VN30 index falling 15% that week [para. 8]. Analysts warn of a potential financial crisis caused by rising U.S. tariffs and deficits, with institutions forecasting economic downturns [para. 9][para. 10]. Standard Chartered predicts a 1% drop in U.S. GDP over two years, while Goldman Sachs reduced its projection for U.S. fourth-quarter GDP growth to 1% [para. 10][para. 11]. The IMF also expressed concern about the tariffs' risks to global growth [para. 11].

The U.S.-China tariff conflict escalated rapidly compared to past disputes. Starting from a 34% tariff on April 2, the U.S. raised duties to 125% on April 8, with China matching this rate by April 11 while hinting at no further hikes [para. 12][para. 13]. The cumulative U.S. tariff on Chinese goods has now reached 145%. Meanwhile, European resistance to U.S. policies intensified, as leaders like French President Macron condemned the measures, and the EU launched retaliatory tariffs targeting U.S. goods and possibly tech giants like Apple and Google [para. 14][para. 15].

Canada has taken a firm stance, retaliating against U.S. tariffs on steel, aluminum, and other goods amounting to over C$29 billion. Prime Minister Mark Carney vowed additional countermeasures for any new U.S. actions [para. 17][para. 18]. While Brazil has chosen a measured response, Japan and Vietnam are preparing economic packages to offset the impacts [para. 18][para. 20]. Vietnam faces severe challenges due to its high reliance on exports to the U.S. [para. 21]. Globally, nations like the UK are adopting industrial policies to shield their economies, while the EU and ECB plan emergency measures to mitigate the broader economic fallout [para. 19][para. 20].

In parallel, international coalitions are emerging as a counterbalance to U.S. disruptions. On April 8, Chinese and EU officials agreed to cooperate on trade remedies and market access [para. 22]. Talks with other actors, like ASEAN, further illustrate global efforts to resist U.S. unilateralism. Additionally, tariff pressures are prompting new trade partnerships, such as potential UK-India and EU-Mercosur agreements, suggesting a multipolar trade landscape may emerge, reducing U.S. influence [para. 23][para. 24].