Trade Armageddon After Trump’s Tariffs: Who Seeks Restraint and Who Promises Retaliation

Wednesday evening (02.04.25). The trade war has begun. The mammoth measures have become reality. International markets are ‘frozen.’ Donald Trump has opened the ‘Pandora’s box,’ radically changing the rules that have governed global trade for decades, targeting both allies and friendly countries of the U.S., as well as America’s ‘enemies.’ The trade war is expected to continue with countermeasures from U.S. trade partners, likely leading to a global price increase. ‘It’s the declaration of our independence,’ Trump said during his speech in the Rose Garden of the White House, presenting a list of ‘mutual’ customs tariffs. ‘Mutual means whatever they do to us, we do to them. It’s very simple; it couldn’t be simpler,’ the U.S. president added, emphasizing it was ‘one of the most important days in American history.’ The heaviest tariffs, at 34%, are imposed on imports from China. A 20% tariff applies to imports from the European Union. High tariffs also apply to products from Japan (24%), India (26%), and Switzerland (31%). Two Southeast Asian countries, Cambodia and Vietnam, face the highest percentage tariffs: their products will be taxed at 49% and 46%, respectively. President Trump also announced the imposition of 25% tariffs on all imported vehicles and parts, totaling nearly $600 billion. Reuters highlighted the surprise over simultaneous 25% tariffs on portable electronic computers, among the largest import items valued at $138.5 billion in 2024. During his unprecedented Rose Garden show, Trump delivered what he does best. He presented an unparalleled spectacle, choosing to announce the start of the trade war from the famous ‘Liberation Day,’ which will remain in history as the day economies worldwide were subjugated. The tariffs ‘distributed’ casually while saying ‘American’ 200 times, ‘amazing’ and ‘fantastic’ just as often, are the new weapons in the hands of a man who calculates nothing. Normalcy for the planet and the global economy is now past as millions of lives globally will be impacted in the long and short term. Trump indeed delivered a historic speech and managed to spark a wave of anti-Americanism with his economic shock and language used. The U.S.: If You Retaliate, There Will Be Escalation. However, following the initial shock to international markets caused by the announcement, came new threats from the U.S. This time via Treasury Secretary Steven Mnuchin, who advised ‘all’ governments internationally to think before ‘retaliating’ against the tariffs implemented by the Republican administration, warning against ‘escalation.’ ‘Restrain yourselves, absorb the blow, wait to see how the situation evolves. Because if you retaliate, there will be escalation,’ Mnuchin emphasized. Gold breaks records, stock market indices fall. Gold prices broke records early this morning, surpassing $3,150 shortly after President Donald Trump’s announcement of a customs tariff storm, particularly targeting Asia and the European Union. Around 02:20 (Greek time), the ounce of the precious metal recorded an 0.80% increase, reaching a new historic high: $1,319. The previous record was set just yesterday. In Sydney’s stock market — one of the first to open internationally post-Washington announcements — the main index fell by 1.8%. In Tokyo’s derivatives market, the drop was even more dramatic (-6%). In electronic trades after Wall Street’s close — generally volatile — the Dow Jones fell 2.4%, Nasdaq 4.25%, S&P 500 3.4%. In currency markets, the yen, generally considered a safe haven by financiers, rose 1% against the U.S. dollar. The EU ‘will respond’ unitedly to U.S. tariffs. Hours after Trump’s announcement, Ursula von der Leyen stressed that the EU would respond to the new tariffs, noting millions, especially the most vulnerable, would suffer. Von der Leyen highlighted that the tariffs were a major blow to the global economy with dire consequences for millions. The EU is ‘ready to respond’ to the new U.S. tariffs, she added. The UK seeks an agreement. The UK government intends to negotiate an agreement with the U.S. to mitigate the impact of the announced customs tariffs, not planning immediate retaliation, stated Trade Minister Jonathan Reynolds. ‘The U.S. is our closest ally; our approach is to remain calm and commit to closing an agreement, which we hope will mitigate the announced impact,’ he said. London received relatively favorable treatment from Trump, with only 10% tariffs on British products imported into the U.S., the lowest announced. Ireland wants an EU response. Irish Prime Minister Micheál Martin expressed deep regret over the 20% tariffs on EU products entering the U.S. and called for a ‘proportional’ reaction from the 27 member states. Each action must be proportional and aim to protect the interests of businesses, workers, and citizens, Martin noted. For ‘wrong measure’ Meloni speaks. Italian Prime Minister Giorgia Meloni described the U.S. tariffs against the EU as a ‘wrong measure’ not benefiting either side. ‘We’ll do everything possible to negotiate an agreement with the U.S. to prevent a trade war that would inevitably weaken the West to the benefit of other international players,’ she continued. Germany calls for avoiding ‘escalation.’ The German chemical industry urged the EU to ‘remain cool-headed’ in responding to new tariffs, emphasizing that any ‘escalation’ would only worsen damages. Canada promises a ‘response.’ Canadian Prime Minister Mark Carn pledged to counter the customs tariffs, deeming these measures as fundamentally altering international trade. Brazil examines ‘all’ possibilities. The administration of Brazilian President Lula made clear it is examining ‘all’ potential measures to address the U.S. decision to impose 10% tariffs on products from Latin America’s largest economy. Japan speaks about a U.S. attack violating WTO rules. The Japanese government judged that Trump’s attack announcing 24% tariffs on Japanese products potentially violates WTO rules and bilateral trade agreements. China calls on the U.S. to ‘immediately cancel’ tariffs. The Chinese government urged the U.S. to ‘immediately cancel’ the new customs tariffs announced Wednesday by Trump, calling for dialogue as these measures ‘threaten global economic growth.’