April 5: Trump’s first round of global tariffs kicks in, next round set for April 9

It is April 5, 2025. At 12:01 a.m. Eastern Time, US customs officers initiated the collection of Donald Trump's new 10% "baseline" tariff on imports, marking a significant change in American trade policy since the Second World War.

This event signifies the beginning of a larger shift in trade policy. By April 9, even higher tariffs ranging from 11% to 50% will be imposed on goods from 57 countries, including key allies such as the UK, Japan, and the entire European Union.

According to Kelly Ann Shaw, a trade lawyer at Hogan Lovells and former White House trade adviser, this is the most significant trade action in recent memory. Speaking at a Brookings Institution event, Shaw emphasized the magnitude of this shift in global trade dynamics.

The repercussions of these changes are already being felt in international markets and political arenas.

On April 2, President Donald Trump declared a universal tariff of 10 percent on the majority of goods imported into the country, along with reciprocal tariffs on approximately 60 nations in response. The 10 percent base tariff on nearly all US imports is set to be implemented by April 5, while the additional reciprocal tariffs on specific countries will go into effect on April 9. These reciprocal tariffs are designed to address issues such as currency manipulation, relaxed pollution and labor regulations, and stringent trade barriers that hinder the US in global trade.

Several key US trading partners were subject to significant reciprocal tariffs as outlined in the April 2 announcement. Notably, China is set to face a 34 percent reciprocal tariff rate, while India will see a 26 percent rate, the European Union at 20 percent, Vietnam at 46 percent, Japan at 24 percent, Taiwan at 32 percent, South Korea at 25 percent, and Thailand at 36 percent - all of which are prominent trading allies of the US.

China will now be subject to a 34% reciprocal tariff rate, in addition to the 20% tariffs imposed by the US in February for fentanyl trafficking, bringing the total to 54%, as reported by US Treasury Secretary Scott Bessent. Russia, on the other hand, is not affected by such tariffs.

President Trump also eliminated the duty-free de minimis 'exemption' for small parcels from China and Hong Kong valued at less than $800. This decision may have an impact on the importation of popular low-cost products from China to the US.

Retaliation and side effects

China announced on Friday that it would be imposing an additional tariff of 34 percent on all goods imported from the United States, escalating trade tensions following the recent announcement by US President Donald Trump of import taxes on various countries. This move marked the first response by any nation to the US tariffs, fueling concerns of a global trade war.

In a statement, the State Council Tariff Commission of China criticized the US actions as being inconsistent with international trade regulations, detrimental to China's rights and interests, and deemed them as unilateral bullying tactics.

Furthermore, Beijing disclosed its intentions to place 16 US entities on an export control list and identify 11 others as "unreliable" entities.

“The purpose of the Chinese government’s implementation of export controls on relevant items in accordance with the law is to better safeguard national security and interests, and to fulfill international obligations such as non-proliferation,” the Commerce Ministry said in a statement.

The imposition of a 34% tariff presents significant challenges for US agricultural products seeking entry into the Chinese market. However, this barrier is seen as an opportunity for alternative exporters, such as those from Australia and Brazil, to expand their presence in China's agricultural sector.

Stock market bears the brunt

The S&P 500 experienced an 11% decline over the past two sessions, marking the steepest two-day slide since March 2020. On Friday, the S&P 500 Index dropped to its lowest level in 11 months, resulting in a loss of $5.4 trillion in market value in just two sessions. Federal Reserve Chairman Jerome Powell expressed concerns that the Trump administration's tariffs may have a lasting impact on inflation. 

The S&P 500 closed 6% lower, recording its worst day since March 2020, with all but 14 members posting losses. The Nasdaq 100 also took a significant hit, plunging 6.1% and entering bear market territory. 

The rapid decline of the gauge from its February peak by 20% is comparable to the market crashes of the 2020 pandemic and the dot-com bubble in 2000. All 11 sectors in the S&P 500 experienced declines, with notable drops seen in Nvidia Corp., Apple Inc., and Tesla Inc. Nvidia Corp. and Apple Inc. both fell by at least 7%, while Tesla Inc. saw a 10% decrease.

Friday's market declines were a direct result of President Trump's implementation of new trade tariffs, which raised concerns about a potential recession. The tariffs had a particularly negative impact on energy and financial companies, with Baker Hughes Co. seeing a significant drop of 13% and insurer MetLife Inc. falling 9%. Tech stocks also suffered losses, with the Philadelphia Semiconductor Index decreasing by 7.6% following a 9.9% loss on Thursday. Companies with substantial manufacturing operations in Vietnam, such as Nike Inc. and Lululemon Athletica Inc., experienced gains after Trump mentioned a positive conversation with the country's leader.