As Donald Trump's "Liberation Day" tariffs on foreign goods kick in, European Commission chief Ursula von der Leyen has warned of the potential "dire" consequences for "millions of people around the globe". Here are some of the possible outcomes.
A US recession Goldman Sachs this week raised the probability of a US recession in the next 12 months to 35%, up from 20%. After yesterday's tariff announcements, that probability is "materially higher", said Simon French, chief economist at Panmure Liberum. US stocks "plummeted" in after-hours trading last night, said CNN, and Democrats were quick to accuse Trump of crashing the economy. "This is not Liberation Day, it's Recession Day," said House Minority Leader Hakeem Jeffries.
Trade war with China "Perhaps the biggest loser" from the tariffs is China, said The Telegraph. A new 34% reciprocal tariff "will have a major impact" on the Asian nation, where 20% of GDP comes from exports. China's leaders are "unlikely to take things lying down", and Beijing has already called for Washington to "immediately cancel" the tariffs or expect countermeasures.
Opportunity for India Although Trump imposed a 27% tariff on India, his even higher tariffs on China, Vietnam, Bangladesh and Thailand might "open space" for India's textiles and electronics industries to fill the gap, said the BBC's correspondent Soutik Biswas. Likewise, India's machinery and automobile sectors could "capitalise" on "tariff-driven relocation".
US/EU trade war Trump's 20% tariffs on the whole bloc is an economic "declaration of war", said Bernd Lange, MEP and leader of the European Parliament's trade committee. After introducing reciprocal tariffs last month in response to Trump's 25% levy on steel and aluminium, "we're now preparing for further countermeasures to protect our interests and our businesses if negotiations fail", Von der Leyen said in a statement today.
The UK forced off the fence The UK "got away" with Trump's baseline tariff rate of 10%, said Politico's London Playbook, but that's still a "very significant blow". Keir Starmer has "made making friends" with Trump a "central plank of his foreign policy", said The Times, but there was "no sign" that the prime minister's "courting" has had any impact. If Starmer fails to secure a trade deal quickly, it will "only increase pressure" for a "tougher approach". |