President Donald Trump announced tariffs on Wednesday against major U.S. trading partners that were more aggressive than anticipated, sending shockwaves through global markets as investors worried the duties would stall the global economy, hit corporate earnings and stoke inflation.
The market reaction was sweeping as Trump said he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of the country’s biggest trading partners. The new levies ratchet up a trade war that he kicked off on his return to the White House.
The duties would erect new barriers around the world’s largest consumer economy, reversing decades of trade liberalization that have shaped the global order.
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For investors, who started 2025 with high hopes of pro-growth policies from Trump but have been spooked by a barrage of tariff-related headlines, Wednesday’s announcement was the clearest look yet at coming changes to the U.S. trade and tariff landscape.
“This is the worst-case scenario that the market was expecting and that’s enough to potentially send the U.S. into a recession and that’s why the futures are so weak,” said Jay Hatfield, CEO at Infrastructure Capital Advisors.
U.S. stock futures fell, with S&P 500 E-minis down 3.5%, while the euro was down 0.3%.
As Trump spoke at the event in the White House Rose Garden, markets were initially relieved as investors latched on to the 10% baseline tariff number, which was less punishing than they had feared.
But then Trump unveiled much higher tariffs against certain countries. Some of China’s neighbors and biggest trading partners such as Bangladesh, Vietnam, Laos and Cambodia were slapped the highest tariffs.
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Exchange-traded funds on these markets listed in New York slumped on the news.
“These figures aligned more closely with aggressive tariff scenarios, putting pressure on risk assets while temporarily supporting the dollar,” said Uto Shinohara, senior investment strategist at Mesirow Currency Management, Chicago.
Analysts expect trading partners to respond with countermeasures of their own that could lead to dramatically higher prices for everything from bicycles to wine.
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