Trump Tariff Blitz Unleashes Delayed Shock to Global Economy

Four months after Donald Trump shocked the world and roiled markets by unveiling a placard full of tariff rates at the White House Rose Garden, his revisions unveiled Thursday generated a more subdued response among investors.

But at an average of 15%, the world is still facing some of the steepest US tariffs since the 1930s, roughly six times higher than they were a year ago. Trump’s latest volley outlined minimum 10% baseline levies, with rates of 15% or more for countries with trade surpluses with the US.

So far, the global economy has held up better than many economists expected after Trump’s initial tariff blitz. A rush to beat the elevated rates spurred a front-loading of exports, aiding many Asian economies and shielding US consumers from price spikes. (See related article: Trump Hits Dozens More Countries With Steep Tariffs).

That could all be about to change.

“For the rest of the world, this is a serious demand shock,” Raghuram Rajan, former India central bank governor and chief economist of the International Monetary Fund, who is now a professor at the University of Chicago Booth School of Business, told Bloomberg TV on Friday. “You will see a lot of central banks contemplating cutting as the rest of the world slows somewhat in the face of these tariffs.”

The months of negotiations, marked by Trump’s social-media threats against US allies and foes alike, ended with new rates that were largely in line or lower than those on April 2, which were paused after stocks plummeted and bond yields surged. Still, there were some shocks, such as a punitive 39% rate for imports from Switzerland and an increase on some Canadian goods to 35%.

Wall Street traders drove stocks to their worst session since May, fueled by weak jobs and manufacturing data. The S&P 500 fell 1.5% as of 11:17 a.m. New York time.

Yields on US two-year debt — among the most sensitive to changes in monetary policy — slumped 21 basis points to a one-month low at 3.75% as money markets added aggressively to wagers on Federal Reserve interest-rate cuts. The Bloomberg Dollar Index tumbled as much as 1%, snapping a six-day advance.

While Trump’s new rates provide some certainty to manufacturers, plenty of tariff uncertainty remains. The US president is expected to unveil separate tariffs on imports of pharmaceuticals, semiconductors, critical minerals and other key industrial products in the coming weeks. And US courts are still assessing the legality of the “reciprocal” tariffs.

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