From Today: 10% Baseline Tariff Takes Effect as Trump Reshapes Global Trade

President Donald Trump’s 10% universal tariff on imports from all countries officially came into force on Saturday. The move, first announced during his “Liberation Day” address on Wednesday, marks a radical shift in U.S. trade policy. Additional duties targeting specific trading partners are set to follow on April 9, including a 20% tariff on goods from the European Union and a 34% rate on Chinese imports.

Specific Tariffs and Market Impact

A separate 25% tariff on all foreign-made cars entering the U.S. took effect on Thursday. The broader tariff plan has already triggered significant economic repercussions. Since the announcement, an estimated $4.9 trillion has been wiped off the global stock market. The U.S. indices—the Dow Jones Industrial Average, the S&P 500, and the Nasdaq—each dropped more than 5% by Friday's close, mirroring losses last seen during the COVID-19 crisis. The UK’s FTSE 100 fell by nearly 5%, marking its worst single-day drop since March 2020.

Tariff Implementation Details

The 10% import tax began at 12:01 a.m. ET Saturday, applying to all goods arriving at U.S. ports and airports. According to U.S. Customs and Border Protection, there will be no grace period for cargo that was not already in transit before the deadline. However, a 51-day grace period will apply for goods loaded and en route before the cutoff—these shipments must arrive by May 27 to be exempt.

Higher Tariffs on the Horizon

Higher tariffs—ranging from 11% to 50%—will be imposed on 57 major U.S. trading partners starting April 9. The EU will face a 20% duty, while China’s total levies will rise to 54% when the new 34% tariff is added. Vietnam, which previously benefited from supply chain diversification away from China, will be subject to a 46% tariff. Canada and Mexico are exempt from these new tariffs, though some of their exports are already covered by an earlier 25% tariff linked to the fentanyl crisis.

Product Exemptions and Sectoral Focus

Exemptions from the tariffs include over 1,000 product categories worth $645 billion in 2024 imports. These include crude oil, petroleum products, pharmaceuticals, semiconductors, uranium, and certain industrial metals. While these exemptions stand for now, the administration is considering new national security tariffs on several of these sectors, excluding energy.

Economic Consequences and Global Response

The EU and China have both announced retaliatory measures, with China set to introduce a 34% tariff on U.S. goods beginning April 10. These countermeasures have intensified fears of a full-scale global trade war. The UK, among those affected by the 10% baseline tariff, has taken a cautious approach. Prime Minister Sir Keir Starmer discussed the situation with leaders from Australia and Italy, agreeing that escalation would be harmful and affirming that the UK’s response would prioritize national interests.

Trump’s Public Reaction

President Trump has remained largely out of the public eye, posting confidently on Truth Social from his golf course. He dismissed business concerns and touted the tariffs as a path to a new trade agreement that would “supercharge” the U.S. economy.

Forecasts for the Eurozone

Economists have drastically revised eurozone growth projections in response to the 20% U.S. tariffs. ABN Amro has downgraded its 2025 growth outlook and warned of possible contraction in the third quarter. ING and Goldman Sachs have echoed concerns, forecasting stagnation and even recession in some scenarios. Goldman now expects the ECB to cut rates as early as April, predicting multiple reductions throughout the year. The inflation outlook is also shifting, with most analysts expecting disinflationary effects due to reduced trade activity and falling energy prices.

Broader Economic Implications

Experts suggest the U.S. tariffs could reduce global GDP growth by 0.5 percentage points. For the U.S., the estimated impact could reach up to 1.5 percentage points, with China and the euro area seeing respective reductions of 1% and 0.4–0.6 percentage points. Though retaliatory tariffs may slightly boost inflation, the dominant effect is expected to be a drag on growth, strengthening the case for monetary easing in affected regions.