President Donald Trump‘s “reciprocal” tariffs on numerous countries were set to be implemented on Wednesday, featuring significant 104% duties on Chinese imports, further escalating his global trade conflict even as he readied for discussions with certain nations.
These aggressive tariffs have disrupted a long-standing global trading framework, instilling concerns of a recession and causing a sharp decline in global stock markets.
On Tuesday, the S&P 500 index closed below 5,000 for the first time in almost a year, approaching bear market territory, which is defined as a 20% drop from its recent peak. Since Trump announced the tariffs last Wednesday, S&P 500 companies have experienced a staggering loss of $5.8 trillion in market value, marking the most significant four-day decline since the index’s inception in the 1950s, according to LSEG data.
Asian markets resumed their sell-off on Wednesday after a brief pause, with Japan’s Nikkei index falling over 3% and South Korea’s won hitting a 16-year low. U.S. stock futures also indicated a potential fifth consecutive day of losses on Wall Street.
Trump has sent mixed messages to investors regarding the long-term status of the tariffs, labeling them as “permanent” while also claiming they are compelling other leaders to seek negotiations. “We have many countries approaching us that want to make deals,” he stated during a White House event on Tuesday afternoon. He later expressed his expectation that China would also seek an agreement.
The Trump administration has arranged discussions with South Korea and Japan, both key allies and significant trading partners, and Italian Prime Minister Giorgia Meloni is scheduled to visit next week. The anticipation of potential agreements with other nations had initially boosted stock markets earlier on Tuesday, but U.S. stocks ultimately relinquished their gains by the end of the trading session.
Trump has nearly doubled tariffs on Chinese imports, raising them from 54% last week in reaction to counter-tariffs announced by Beijing. China has pledged to resist what it perceives as coercive tactics.
Economists caution that U.S. consumers may experience increased prices on a wide range of products, from sneakers to wine, due to the ongoing trade conflict. The complete impact of the tariffs implemented on Wednesday may take time to manifest, as goods already in transit as of midnight will be exempt from the new charges, provided they arrive in the U.S. by May 27.
A recent Reuters/Ipsos poll indicates that nearly 75% of Americans anticipate a rise in the cost of everyday items over the next six months. Trump’s previous blanket 10% tariffs on imports from various countries began on Saturday. The latest tariffs, which came into effect at 12:01 a.m. ET (0401 GMT), target nations that Trump claims are “ripping off” the U.S.
This list includes several of America’s closest allies, such as the European Union, which faces a 20% tariff. Vietnam, which gained from the U.S. supply chain shifts away from China during Trump’s first-term trade conflict, is now subject to a 46% tariff.
Trump asserts that these tariffs are a reaction to barriers that hinder U.S. goods and have negatively impacted American businesses. He has also accused countries like Japan of manipulating their currencies for trade advantages, a claim that Tokyo has denied. Japan’s finance minister stated on Wednesday that trade discussions with Washington might encompass foreign exchange rates.
Trump has indicated that he may not be done with imposing tariffs. During a meeting with Republican lawmakers on Tuesday evening, he mentioned that he would soon unveil “major” tariffs on pharmaceutical imports, which are among the few categories currently exempt from the new taxes.
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