What are the 2025 Trump Tariffs and Why do they matter to the Global Markets?

Trump’s Tariff Strategy and Timeline

In the last five months, Trump has delivered the biggest shock to the international trading market. Certain impact of this disruption is long-lasting and may not be fully reversible. Still, it is likely that a refined, rules-based global trading system will take shape – with or without the U.S. at the centre of it.

With the start of this next term, he took the stage and vowed in his inaugural address to ‘tariff and tax foreign countries,’ framing it to flourish livelihoods of American citizens. On February 1, Trump signed an executive order imposing 10% tariff on Chinese imports and hiking to 25% on goods from Mexico and Canada – a move that drew criticism from trade partners and economists alike. The action promoted quick outrage from all three countries with promises to retaliate.

On February 13, Trump declared a plan for ‘reciprocal tariffs’, by the objective to align U.S. import tax rates with those imposed by other countries to promote what he described as fair trade.

By March 3, he escalated the trade tension further, raising tariffs on all Chinese imports to 20%, while signalled readiness for tariffs on goods from Canada and Mexico to take effect shortly after. However, a couple phone calls later with the leaders of automakers of Ford, General Motors, and Stellantis, Trump granted a one-month exemption on the tariffs impacting goods from Canada and Mexico.

April 2nd, or as Trump called it Liberation Day, announcing sweeping new tariffs on imports from several nations, including India and European nations. These measures were taken as ‘reciprocal’ actions to counter what the Trump administration described as decades of one-sided trading policies. The global reaction was swift – and not in Trump’s favour. Leaders from China, India and the European Union openly criticized the move.

By April 10, his much-talked-about reciprocal tariffs were set to kick in. But just hours before they were supposed to take effect, the administration pulled back, announcing a 90-day pause on most of the rate hikes. The one country that was left out of the privilege? China.

What followed was a whirlwind of headline-making moves, as the China and U.S. went back and forth with tit-for-tat tariffs – jumping from 20% to all the way to a staggering 145%

Trump said, “Based on the lack of respect that China has shown to World Markets, I am hereby raising the tariff charged to China to 125%, effective immediately” The next day, China reciprocated with the same tariff rate against U.S. and said, “If the U.S. continues to impose tariffs on Chinese goods exported to the U.S., China will ignore it”

Finally, the two superpowers met in Geneva and came to an agreement to temporarily reduce tariffs. The new rate was slashed down to 10% for U.S. imports and 30% for Chinese imports.

A major global relief was when on May 28, the U.S. Count of International Trade in New York, gave the verdict that Trump didn’t’ technically possess the authority to impose such sweeping tariffs, that included the ones against China. But the Trump administration ruled the appeal swiftly.

As of today, Mr. President has revealed plans to notify trading countries about the new tariffs. As the 90-day extension has taken place, the world waits as it’s still unclear if Trump is going to stay true to his words, as he has often set two-week deadlines which are hardly met.

Affected Sectors

The impact of the tariffs affected industries across sectors, as U.S.’s trade war with China, along with its own reliance on Chinese instruments caused the markets to tumble for days.

According to Investing.com , tech-giants cumulatively known as the Mag 7, witnessed a ripple effect as stocks started tumbling one after the other. Apple leading with a 4.7% drop, followed by Tesla with 4.8%, Amazon 4%, Meta 3.4%, Alphabet, Microsoft, and NVIDIA with significant drops of 2.6%, 1.9%, 3.3% respectively. This severely impacted the electronics and technology industry as U.S. and China are heavily reliant on Taiwan for its semiconductors. This reliance is well documented, read more about the facts and figures on this official report by CSIS.

The same effects were mirrored to retail giants such as Walmart, Target, Nike, H&M as these organization source their raw materials from China eventually cutting into their margins with higher costs

Steel and Aluminium were among the first industries to be hit with tariffs causing the manufacturing and construction sector to face increased uncertainty and volatility to the market.

Among the hardest-hit sectors in both the U.S. and EU were soybeans, dairy, pork, corn, wine, and nuts – industries especially vulnerable to retaliatory tariffs. As China imposed heavy tariffs on agribusiness industries to pressure Trump politically, eventually causing distress among American farmers as they are forced to reduce match foreign prices.

All of it did heavily rupture the logistics and supply chain sectors as markets shifted, causing goods to redirect import orders. It also led to changes in shipping patterns, delayed customs clearance and new trade routes. As a result, global freight companies such as FedEx, DHL, Maersk, Happag-Lloyd, and port companies faced the impact.

Economic outlook, market shifts, who gains who loses

Renounced economist Paul Krugman, while speaking with Bloomberg said Trump’s tariffs are like “throwing sand in the gears of international commerce and manufacturing”

The global market had a sharp reaction to the tariff news particularly on China, which had a disruptive and ripple-effect to global markets. US Indices such as Dow Jones, S&P 500, Nasdaq all fell in the initial days following the announcement, with investors fearing a full-blown trade war.

In a historic first in over a century, the S&P500 experienced three consecutive drops of 4% (Source: YThe entire stock market bloodshed caused to wipe away $10 trillion off major markets around the world.

European companies such as Shell, Siemens, LVMH, Accenture were some of the biggest users. Aramco, Saudi Arabia’s oil supergiant, lost 8% of its market value in a matter of 3 days.

Indian markets saw a mixed reaction as Sensex and Nifty dipped slightly, mirroring global nervousness. However, some expert optimism saw it as an advantageous position for India as it is seen as a viable alternative to China in global supply chains especially in pharmaceuticals, textiles, and IT industries.

Asian markets, especially in China, Taiwan, and South Korea, also dropped significantly as fears of reduced demand and higher costs concerned the investors.

Japan’s standard benchmark index Nikkei 225 slumped by 4% bringing it to a lowest in 8 months.

Source: The Guardian, based on Google Finance data.

However, there was a gradual recovery being witnessed in all markets with the tariff delays which can get derailed as the days to execution comes ahead.

According to a J.P. Morgan Research, the business sector is expected to be uncertain for a large sentiment shock, which could be one of the reasons shaping the economy towards a recession. At the start of the year, there was a brief boost in sentiment following trumps return to office, but that optimism quickly gave way to growing uncertainty, caused by the wave of tariffs and broader economic turbulence. Along with essentials getting costlier for the American public has again shifted the sentiment towards a depressing state.

Comparison with the 2018/2020 tariffs

Trump is no stranger to tariffs. During his first term, Trump kicked off a trade war largely targeting China, slapping tariffs on nearly all Chinese imports. In response Beijing hit back with its own retaliatory set of tariffs on American goods, including fruits and automotive imports. In 2020, the U.S. also used the threat of further tariffs to push Canada and Mexico into renegotiating the North American Trade Agreement.

However, in terms of the objective that US wanted to achieve, the broader goal was clear: to overhaul exhausting trade deals and bring China to the negotiating table, whereas in the second term it was to reduce the reliance on China and promote a nationalist economic agenda. Unlike sending out a one-shot blanket move to all countries in 2025, it was a rather gradual escalation in 2018 that eventually took shape to be a part of a broader policy agenda to correct trade imbalances.

Global reactions - China, India, EU

Soon after the initial announcement in January, Okonjo-Iweala, Director-General of the WTO said, “If we have tit-for-tat retaliation, we go to where we were in 1930s and we’re going to see double-digit GDP losses. That’s catastrophic.” She urged for countries to refrain from retaliation, but it didn’t stop at least China from doing so.

Many countries woke up to the news of their exports being charged at 10% by the U.S., which was followed by a universal market turmoil. However, it didn’t take long for countries to come ahead with retaliatory measures. In a nutshell, the global reaction was a mix of retaliation, recalibration, and realignment – with a clear “ready-to-fight” message mutual among all of U. S’s trading partners.

China, particularly the most affected by the new tariffs, witnessed the overall duties of Chinese imports to over 50%. The Chinese called for U.S. to “immediately cancel” the tariffs, warning it would impact the global economic development and would affect U.S.’s interest and supply chains.

The UK took a sigh of relief to be able to have escaped the list of countries facing the heavy tariffs. The two countries struck a deal over the tariffs being paid on certain goods. The general 10% tariffs on all imports still applies to the UK, but with a few exemptions on cars, steel and aluminium. In return, the UK would waive off the 20% tariff on US beef.

Trump described India as a ‘very, very, tough’ market due to its high import duties, justifying a 26% U.S. tariff as a toned-down response to the 52% India reportedly charges on U.S. goods. The Indian government, in turn, responded by calling the development a ‘mixed bag’ rather than a setback. However, it still ended well for the country as the pharmaceutical industry, India’s biggest export, was exempt.

Japan took a rather offended reaction to the news, given that “Japan is a country making the largest amount of investment in US” wondering if it makes sense to have uniform tariffs for Japan as well.

Conclusion

On some good news, the latest economic reports aren’t what the sentiments suggest. Inflation has been controlled, and hiring has been booming as well. Trends were similar when Trump announced tariffs during his first term. So, should we take it easy? “Not just yet”, said Ernie Tedeschi, director of Economics at Yale University’s Budget Lab. He emphasized on the fact that even though there has been a credible inflation report and even a modest recovery in the job market, it should not make people complacent on what next month will be. Especially knowing how unpredictable the tariffs can be, as the President is known to announce new tariffs, only to take them back and call upon new ones.

As far as global economy is concerned, the world awaits on Trump’s next move, as he navigates policies that could significantly impact global markets.