WASHINGTON — The scale of President Donald Trump’s global tariffs began to sink in Thursday as stock markets fell sharply, countries warned of retaliation and US companies and consumers braced for the impact on their bottom lines and bank accounts.
The S&P 500 tumbled nearly 5 percent, the worst market sell-off since the early weeks of the coronavirus pandemic. Trump had said for weeks that he would impose “reciprocal tariffs” on allies and adversaries, but the tariffs announced Wednesday, which will begin to take effect Saturday, were far higher than experts had expected.
China, one of the countries hardest hit by the tariffs, vowed to take countermeasures to “safeguard its own rights and interests.” Its state media described the tariffs as “self-defeating bullying.”
South Korea convened an emergency task force and vowed to “pour all government resources to overcome a trade crisis.” In Brussels, Ursula von der Leyen, the European Commission president, said, “If you take on one of us, you take on all of us.” French President Emmanuel Macron called on European companies to suspend all investments in the United States “until things have been clarified” over the tariffs.
Also Thursday, tariffs Trump previously announced on automobiles and auto parts took effect, and the impact was immediate. Canada said it would match the 25 percent tariff with an equal one. Stellantis, which owns Jeep, Ram, Dodge and Chrysler, said it was temporarily halting production at a plant in Mexico and another in Canada.
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Business groups, trade experts, economists, Democratic lawmakers and even a few Republicans swiftly denounced the tariffs Thursday as an unnecessary drag on the economy. The effect on American wallets will be broad, as companies are expected to pass on at least some of the costs of the tariffs to customers.
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Just a sampling of the products found in many American homes that are facing new tariffs: laptop computers from Taiwan, wine from Italy, frozen shrimp from India, Nike sneakers from Vietnam, Irish butter.
Trump has framed the tariffs as an attempt to level the field with other countries’ restrictionist trade policies, and he contends the new levies will lead to a renewal in US manufacturing. He is getting support from some labor unions, including the United Auto Workers.
On Fox News, Howard Lutnick, the commerce secretary, said Thursday that the tariffs would lead to “the greatest renaissance of manufacturing in America.” He predicted they would create “the most incredible set of jobs,” including for Americans without college degrees.
“The coolest jobs, the highest-paying jobs, they’re all coming to America, and Donald Trump is bringing them in because we are tired of having them built in Taiwan,” Lutnick said. “We’re tired of having it built in South Korea. It’s time for these things to be built in America.”
Trump appeared to try to shake off fears of an economic downturn when he wrote on Truth Social, his social media site, in all capital letters: “The operation is over! The patient lived, and is healing. The prognosis is that the patient will be far stronger, bigger, better, and more resilient than ever before.”
In a sharp shift from decades of trade policy, Trump instituted Wednesday (what he called “Liberation Day”) a 10 percent baseline duty on all goods imported into the United States. In addition, other nations will be charged a so-called reciprocal tariff at an even higher rate next week.
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For the European Union and China, the two largest US trading partners, the White House set tariffs of 20 percent and 34 percent. The levy on China will be added to a 20 percent tariff Trump previously established. He also ordered the closure of a loophole, known as the “de minimis” exemption, that allowed retailers to send clothes and other goods worth less than $800 from China directly to American shoppers without paying tariffs.
Other Asian countries were affected by Trump’s plan. A 46 percent levy was placed on Vietnam, a beneficiary of companies’ moving production out of China during the first Trump presidency. Taiwan, Thailand and Indonesia were dealt import duties of more than 30 percent. The White House put a 26 percent tariff on imports from India.
For decades, exports have served as a pathway to prosperity for developing Asian countries emerging from conflict, crisis or poverty.
Cambodia, a producer of clothing and footwear, was hit with a 49 percent tariff. The United States is the country’s largest export market. “As a small country, we just want to survive,” said Sok Eysan, a spokesperson for Cambodia’s ruling Cambodian People’s Party.
Trump has blamed the sale of inexpensive goods from these countries for the hollowing out of America’s manufacturing sector. But they have also helped to moderate inflation, keeping prices in check for US consumers.
Sarang Shidore, director of the Global South program at the Quincy Institute for Responsible Statecraft in Washington, said the tariffs would hit several developing countries hardest while encouraging much of the world to move more quickly toward an order without the United States at its center.
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“When it comes to trade, we are very much in a multipolar world, and alternative markets exist,” he said. “Of course, there will be pain and transaction costs in diversification.”
Close allies such as Japan and South Korea were not spared. Neither were countries including Australia and Brazil that buy more from the US than they sell to it.
While China, South Korea and some members of the European Union reacted angrily, some countries were more restrained.
Prime Minister Shigeru Ishiba of Japan called the tariffs “extremely regrettable.” But he refrained from talk of retaliation, saying his government was trying to impress upon the Trump administration that Japan was helping the United States to industrialize again.
Britain also did not suggest it would immediately retaliate. Instead, Prime Minister Keir Starmer said negotiations toward a trade deal with the United States would continue.
Business leaders were trying to figure out how to contend with the tariffs, which upended some assumptions they had made.
During the first Trump term, technology companies moved some production to Vietnam in case of a trade war with China. A third of Vietnam’s exports are now electronics.
Apple moved manufacturing of AirPods, watches and iPads over the past several years to Vietnam. It shifted some iPhone production to India after years of relying solely on Chinese factories. Now that none of those countries are safe havens, investors feared the effect on Apple’s revenues. The company led a sell-off of tech stocks; its shares fell 9 percent.
Trump’s policies are also complicating decisions for smaller US businesses. Brenden McMorrow, co-founder of Move2Play, a toymaker in Torrance, California, said the company had built all of its products in China since it started about nine years ago. But it began to consider factories in Vietnam or India to protect against tariffs on Chinese-made products.
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In Vietnam, Move2Play found that the factories run by Chinese companies using materials from China were not much cheaper. Instead, it decided to try a test run of making one of its toys in India, a decision McMorrow said seems better with the lofty tariff now imposed on Vietnam. It studied whether it could manufacture in the United States, but he said that the costs were roughly five times higher than in China.
Despite the higher cost of tariffs, he doesn’t see US production as any more viable now.
“I don’t think it really makes sense to invest in trying to do a lot of this manufacturing in the US,” he said. “If the next president comes in and just reverses course on all these tariffs, then you’re going to be in a terrible spot.”
The extent of the “Liberation Day” levies led some members of Congress, including a handful of Republicans, to try to reassert congressional authority over tariffs. The Constitution’s commerce clause gives the legislative branch power over trade, but in modern times, that has increasingly been ceded to the president.
Sens. Chuck Grassley, R-Iowa, and Maria Cantwell, D-Wash., introduced the Trade Review Act of 2025, a bill that would require the president to notify Congress of new tariffs within 48 hours of imposition and give Congress 60 days to approve or disapprove. But even if the Senate were to pass the bill, the Republican-controlled House would be unlikely to consider it.
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This article originally appeared in The New York Times.