US President Donald Trump’s aggressive trade strategy officially took effect at midnight, setting off a global economic storm.
As sweeping tariffs slam dozens of countries, economists warn that ordinary American consumers will be among the hardest hit with prices on imported goods set to soar.
According to Neil Shearing, group chief economist at Capital Economics, the impact of these tariffs will be far-reaching. “There’s no winners from a tariff war in aggregate. Everyone’s worse off if we start taxing consumption,” he told CNN. Shearing emphasized that the financial burden will fall most heavily on US households and Chinese producers.
Imports from China, the main target of the new policy, now face a minimum tariff of 104%, effectively doubling the cost of products entering the US market. Trump also signed an executive order tripling tariffs on items valued under $800, which will directly impact popular e-commerce platforms such as Shein, Temu, and AliExpress.
Although China hasn’t responded with fresh retaliatory measures yet, it has made clear its intention to push back. State media and government officials have signaled a strong resolve, with Beijing expected to respond decisively if tensions continue to escalate.
Canada, meanwhile, has already activated retaliatory tariffs. As of midnight, a 25% duty now applies to certain US-made vehicles not covered under the US-Mexico-Canada Free Trade Agreement. These moves add another layer of complexity to an already turbulent trade landscape.
Despite mounting backlash, including from allies and some of his closest political supporters, Trump has doubled down on his approach. He claims the tariffs will “restore fairness” and revitalize American manufacturing, while inviting foreign leaders to negotiate “tailored” trade deals on his terms.
Trade delegations from Japan and South Korea are already en route to Washington, while Italy’s Prime Minister is scheduled to meet with Trump next week. The European Union has also signaled openness to discussions, proposing increased purchases of American natural gas.
Financial markets, however, are reacting poorly. Asian and European stock indexes plunged, and US stock futures tumbled sharply. In the week since the tariff announcement, trillions of dollars in US market value have been wiped out, raising fears of a potential global recession.
The economic uncertainty has triggered disputes within Trump’s own orbit. A public spat between Elon Musk and senior trade adviser Peter Navarro erupted after Navarro dismissed Musk as a mere “car assembler.” Musk fired back, calling Navarro a “moron.” The White House dismissed the feud as harmless, saying, “boys will be boys.”
The tech sector, in particular, is on edge. A top analyst has warned that the price of an iPhone could soar to as much as $3,500 if Apple is forced to shift its production to the United States. Such a dramatic price hike would be devastating for both consumers and tech companies.
While Trump remains steadfast in defending his economic agenda, experts like Shearing argue that the collateral damage will be severe. “If global bond markets sell off and equity markets fall, then that tightens financial conditions,” he said. “Interest rates rise, mortgages cost more, and businesses delay investment. Ultimately, it’s the average consumer who pays the price.”
