President Donald Trump's “retaliatory” tariffs on dozens of countries took effect Wednesday, including a massive 104% tariff on Chinese goods, further escalating his global trade war even as he prepared to negotiate with some countries.
Trump's tough tariffs have shaken the decades-old global trading order, heightened fears of recession and sent global stocks tumbling.
The S&P closed below 5,000 for the first time in nearly a year on Tuesday and is approaching a bear market, defined as a 20% decline from its most recent high.
The S&P 500 has lost $5.8 trillion in stock market value since Trump announced tariffs last Wednesday, the biggest four-day loss since the index was created in the 1950s, according to LSEG.
The sell-off in Asian markets resumed on Wednesday after a brief respite, with Japan's Nikkei falling more than 3% and South Korea's won falling to a 16-year low. U.S. stock futures also pointed to a fifth straight day of losses on Wall Street.
Trump has given investors mixed signals about whether the tariffs will remain in place long-term, calling them “permanent” but also boasting that they put pressure on other leaders to negotiate.
“We have a lot of countries coming to us that want to make deals,” he said at a White House event Tuesday afternoon. At a later event, he said he expected China to also seek an agreement.
The Trump administration has scheduled talks with South Korea and Japan, two close allies and major trading partners, and Italian Prime Minister Giorgia Meloni is scheduled to visit the country next week.
The prospect of deals with other countries pushed stock markets higher on Tuesday, but U.S. shares lost ground by the end of the trading day.
Trump nearly doubled tariffs on Chinese imports, which were set at 54% last week, in response to counter-tariffs announced by Beijing last week. China has vowed to fight what it sees as blackmail.
Economists warn that the trade war will likely see American consumers face higher prices on everything from sneakers to wine.
The full impact of the tariffs imposed Wednesday may not be immediately apparent, as any goods already in transit as of midnight will be exempt from the new duties if they arrive in the U.S. by May 27.
Nearly three-quarters of Americans expect prices for everyday items to rise over the next six months, according to a new Reuters/Ipsos poll.
Trump's previous sweeping 10% tariffs on all imports from many countries took effect Saturday. The latest round of tariffs, which took effect at 12:01 a.m. ET (04:01 GMT), target countries that Trump says are “ripping off” the U.S.
The list includes many of the United States’ closest allies, including the European Union, which was hit with a 20% tariff. Vietnam, which benefited from the shift in U.S. supply chains away from China during Trump’s first-term trade war with Beijing, faces a 46% tariff.
Trump has said the tariffs are a response to barriers to American goods that have stymied American businesses. He has also accused countries including Japan of devaluing their currencies to gain a trade advantage, something Tokyo denies.
Japan's finance minister said on Wednesday that trade talks with Washington could include exchange rate issues.
Trump has signaled that he may not be done with tariffs yet.
Speaking to Republican lawmakers on Tuesday night, he said he would soon announce “massive” tariffs on pharmaceutical imports, one of the few categories of goods exempt from the new taxes.
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