Global trade war looms as Trump tariffs spark retaliation fears

[UNITED STATES] Countries around the world vowed to escalate a trade war with the United States on Thursday, as President Donald Trump's sweeping tariffs sparked concerns about severe price hikes in the world's largest consumer market.

The sanctions outlined by Trump on Wednesday sparked a drop in global financial markets and drew outrage from other leaders facing the end of a decades-long era of economic liberalization.

However, the White House sent inconsistent messages about whether the tariffs were intended to be permanent or a negotiating strategy, with Trump claiming they "give us great power to negotiate."

The timing of the tariffs has raised eyebrows among trade experts, coming just weeks before critical midterm elections in the U.S. Some analysts suggest the move is aimed at galvanizing Trump’s political base, which has long supported his "America First" trade policies. However, others warn that the economic fallout could backfire, particularly in swing states reliant on manufacturing and agriculture exports.

The United States' tariffs would be the highest in more than a century, with a 10% baseline duty on all imports and higher targeted penalties on some of the country's largest trading partners.

This might raise the price of cannabis, running shoes, and Apple's iPhone in the United States for consumers. According to Rosenblatt Securities' predictions, a high-end iPhone may cost over $2,300 if Apple passes the costs onto consumers.

Behind the scenes, multinational corporations are reportedly scrambling to reassess their supply chains. According to industry insiders, companies like Walmart and Amazon are exploring alternative sourcing options in Southeast Asia and Latin America to mitigate the impact of higher tariffs. Still, experts caution that shifting production away from China—the world’s manufacturing hub—could take years and incur significant costs.

Businesses rushed to adjust. Stellantis stated it will temporarily lay off U.S. workers and close operations in Canada and Mexico, while General Motors said it would increase production in the United States.

Canadian Prime Minister Mark Carney stated that the United States has abandoned its historic position as a promoter of international economic cooperation. "The global economy is fundamentally different today than it was yesterday," he declared as he unveiled a limited set of responses.

The ripple effects of the tariffs are already being felt beyond trade. Diplomats in Brussels and Beijing have hinted at potential retaliatory measures targeting U.S. tech and agricultural exports, which could further strain geopolitical relations. Notably, China’s Commerce Ministry issued a statement vowing to "defend its legitimate rights," signaling a possible escalation in the ongoing U.S.-China tech rivalry.

China has pledged retribution for Trump's 54% duties on goods from the world's second largest economy, as has the European Union, which faces a 20% charge. French President Emmanuel Macron has called on European countries to freeze investing in the United States. Other trading partners, including as South Korea, Mexico, and India, have suggested they will hold off for the time being while they negotiate concessions.

Washington's allies and adversaries both warned of a devastating damage to global trade. Tariffs certainly pose a serious risk to the global economy. "It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty," Georgieva said.

Economists at the Peterson Institute for International Economics estimate that the new tariffs could reduce global GDP growth by up to 0.5% in 2025 if they remain in place. The report highlights particular vulnerabilities in emerging markets, which rely heavily on export-driven growth and could face currency instability as trade flows reconfigure.

U.S. Commerce Secretary Howard Lutnick and senior trade adviser Peter Navarro told cable news programs on Thursday that the president would not back down and that the tariff increases were not negotiable.

Trump then appeared to contradict them, telling reporters, "The tariffs offer us a lot of leverage in negotiations. Always have. I used it quite well during the first administration, as you can see, but now we're taking it to a whole other level."