Global markets are bracing as Donald Trump prepares to announce reciprocal tariffs, with some Republican senators voicing their opposition. This move risks a global trade war and potential retaliation from major trading partners such as China, Canada, and the European Union. The US president insists that such action is necessary as the world’s biggest economy has been “ripped off by every country in the world.”

The uncertainty caused by Trump’s tariffs has jolted markets, although the Dow and S&P 500 have shown some gains. The president has been vague about his plans, saying that his tariffs would be “far more generous” than those previously levied. His fixation on tariffs is increasing US recession fears, with Goldman Sachs raising their 12-month recession probability from 20% to 35%.

China, South Korea, and Japan have agreed to strengthen free trade between themselves ahead of Trump’s expected tariff announcement. However, the US president said that he is not worried that his actions would push allies towards Beijing and mentioned that a deal on TikTok could also be tied to China tariffs.

The EU has unveiled its own measures in response, and IMF chief Kristalina Georgieva said at a Reuters event that US tariffs are causing anxiety, although their global economic impact should not be dramatic.

Economists predict that the upcoming tariffs could target the 15% of partners that have persistent trade imbalances with the US. Key European and Asian indexes have closed lower, and a Goldman Sachs report reflects a lower growth forecast and falling confidence.

Bottom line: The upcoming tariffs are causing significant uncertainty in the global marketplace and increasing fears of a trade war.

Source: https://www.theguardian.com/us-news/2025/apr/01/donald-trump-us-reciprocal-tariffs-trading-partners