The full impact of Trump’s tariffs is yet to be realised, but the outlook is already murky
US President Donald Trump is facing backlash both globally and domestically, but at this point, he appears in no mood to withdraw his reciprocal tariffs. The world economy is already showing signs of wilting.
The high drama began last week when Trump announced a sweeping range of tariffs between 10 per cent and 50 per cent targeting multiple trading partners, including China, the European Union, and Taiwan. China, the main target of Trump’s ire, was hit with a 34 per cent tariff on imports to the US, in addition to a previous 20 per cent duty. Beijing wasted no time in retaliating, slapping a reciprocal 34 per cent tariff on American goods, escalating the tariff war even further.
In a scathing response, China’s commerce ministry accused the US of “blackmail†and said it would “fight to the end†if Washington insisted on continuing “down the wrong path.†A blistering editorial in Xinhua called the Trump administration’s approach “naked extortion,†accusing it of turning diplomacy into blunt coercion. Chinese officials have also strategically leaned into public diplomacy, circulating a 1987 speech by then-President Ronald Reagan warning against the dangers of tariffs. Experts see the current situation as a dangerous game of brinkmanship.
Markets across the globe have reflected the uncertainty. On Monday, US indices touched their lowest point in over a year, with volatility gripping investors worldwide. The Nikkei in Japan rebounded 6 per cent Tuesday after plummeting to an 18-month low. Hong Kong’s Hang Seng, reeling from its worst day since 1997, bounced back 2 per cent. Even Chinese blue-chip stocks recouped some losses, gaining 0.7 per cent after a bruising 7 per cent fall the previous day. However, this rebound is seen by many as temporary optimism amid broader fears. Billionaire investor Bill Ackman — once a vocal Trump supporter — has called for a temporary halt to the tariff war to stabilise markets.
The ripple effects of Trump’s tariffs extend beyond China. The EU, also targeted by the Trump tariffs, has proposed retaliatory measures of its own, including a 25 per cent tariff on US exports such as soybeans and sausages. Similarly, Taiwan, facing a punishing 32 per cent reciprocal tariff, has already expressed its willingness to negotiate. President Lai Ching-te proposed a “zero-tariffs†pact and deeper investment ties with the US, while noting that Taiwan’s trade surplus is primarily driven by US demand for tech.
Amid the rising global tensions, India is playing the role of mediator and strategic partner. External Affairs Minister S Jaishankar and his US counterpart held high-level talks on Tuesday, advocating for an “early trade deal†to safeguard economic stability between the two democracies. New Delhi is also pushing for tariff exemptions on critical Indian exports while laying the groundwork for long-term supply chain cooperation with the US.
India’s proactive diplomacy signals its desire to maintain a balanced relationship with both Washington and Beijing. By positioning itself as a pragmatic partner, India hopes to shield its economy from the worst effects of the trade war and emerge as a stabilising force in the Indo-Pacific.
As the clock ticks toward Trump’s Wednesday deadline for more tariffs, the world braces for what could be a new chapter in economic conflict. While the US and China hunker down in a war of words and tariffs, other nations like India are racing to keep the doors of diplomacy open. Whether cooler heads will prevail remains to be seen, but one thing is certain: the world economy is now on edge!
