Stocks tumbled in the U.S., Asia and Europe. Allies and adversaries alike were weighing their responses.

By Ana Swanson, Alan Rappeport, Tony Romm and Matthew Mpoke Bigg,
New York Times, April 3, 2025, 10:17 a.m.

Wall Street opened sharply lower on Thursday, after a slump in global markets in response to President Trump’s major round of tariffs on U.S. imports. The world’s biggest economies reacted swiftly to the new levies, a significant escalation of trade tensions with the United States, and some countries warned of retaliation.

The S&P 500 opened more than 3 percent lower, a huge drop for the index, echoing sharp declines in Asia and Europe as investors balked at the tariffs. China vowed to take countermeasures to “safeguard its own rights and interests.” Its state media described the tariffs as “self-defeating bullying.”

Mr. Trump had said for weeks that he would impose “reciprocal tariffs” on allies and adversaries, but the tariffs announced on Wednesday were far higher than experts had expected, and are likely to drive up prices for American consumers and manufacturers.

In Brussels, Ursula von der Leyen, the European Commission president, said that the bloc would be united in its response to the tariffs. “If you take on one of us, you take on all of us,” she said. The duties posed a particular threat to attempts to revive the largest economy in Europe, Germany’s, which has been stagnant.

The response from Japan, the largest overseas investor in the United States, was more restrained. Prime Minister Shigeru Ishiba called the tariffs “extremely regrettable.” But he refrained from talk of retaliation, saying that his government was trying to impress upon the Trump administration that Japan is 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.

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Business groups, trade experts, economists, Democratic lawmakers and even a few Republicans swiftly denounced the tariffs, while some industries scrambled to understand how they would be affected.

Mr. Trump framed his policies as a response to a national emergency, saying that tariffs were needed to boost domestic production.

Mr. Trump could have tried to fix the rules governing global trade, which he says allies have abused to the detriment of the U.S. economy and American consumers, said Eswar Prasad, a professor of trade policy at Cornell University. Instead, he said, “Trump has chosen to blow up the system governing international trade.”

Here’s what else to know:

• Tariff rates: The United States will subject Chinese goods to a staggering new tariff of 34 percent, on top of the tariffs that Mr. Trump had already imposed since January. The European Union’s tariff was set at 20 percent, Japan’s at 24 percent, Britain’s at 10 percent and India’s at 26 percent. Mr. Trump said little about the methodology behind those calculations.
• Markets fall: The market reaction suggested that the scale of the tariffs had come as a surprise. Futures on the S&P 500 slumped over 3 percent, as benchmark indexes dropped more than 3 percent in Japan and nearly 2 percent in Hong Kong and South Korea. The Stoxx Europe 600 was down more than 2 percent and Brent crude, the international oil benchmark, dropped by 3 percent.
• Loophole closed: Mr. Trump also scrapped a loophole called the de minimis rule, which has been used by many e-commerce companies to send low-cost goods to the United States from China without having to pay taxes.
• Auto tariffs: New tariffs on all automobiles made outside the United States took effect, adding to previous tariffs on steel, aluminum and other imports that Mr. Trump has imposed since returning to office in January.

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