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Trump's latest tariffs are set to escalate the global trade war

On Wednesday, President Donald Trump was set to implement his "reciprocal tariffs" on dozens countries, including 104% on Chinese products. This would intensify the global trade war, even as Trump prepared for negotiations with certain nations.

Trump's punishing trade tariffs have shaken the global trading order, which has been in place for decades. They have also sparked fears of a recession and sent stocks around the world sharply down.

Tuesday, the S&P 500 closed below 5,000 points for the first time since nearly a full year. It is now approaching a bear market defined as 20% lower than its recent high.

According to LSEG, S&P 500 companies lost $5.8 trillion since Trump announced the tariffs on Wednesday. This is the largest four-day decline since the benchmark was created in the 1950s.

After a short respite on Tuesday, the sell-off in Asian markets resumed. Japan's Nikkei was down more than 3% while South Korea's won fell to its lowest level in 16 years. U.S. Stock Futures also indicated a fifth consecutive day of losses for Wall Street.

Trump has given investors mixed signals on whether tariffs will be in place for the long-term. He describes them as "permanent", but boasts that he is pressuring other leaders into asking for negotiations.

He said, "There are a lot more countries that want to do deals" at an event held by the White House on Tuesday afternoon. At a subsequent event, he said that he also expected China to pursue a deal.

Trump's administration is scheduled to meet with South Korea and Japan - two of its closest allies and trading partners - and Italian Prime Minister Giorgia Melons will be visiting next week.

Stock markets in the United States had been boosted by the prospect of deals made with other countries earlier on Tuesday. However, the gains had been wiped out by the close of trading.

Trump almost doubled the duties on Chinese imports which were set at 54% last Friday, as a response to counter-tariffs announced by Beijing last week. China has promised to fight blackmail, which it sees as a threat.

As a result, economists warn that U.S. consumer prices will likely increase on everything from wine to sneakers.

Goods already in transit at midnight on Wednesday will not be subject to the new tariffs if they reach the U.S. before May 27.

A new Ipsos survey found that nearly three quarters of Americans believe the price of everyday products will rise over the next six-month period.

Trump's previous 10% tariffs across the board on all imports began on Saturday. The latest round of tariffs, which went into effect at 12:01 am ET (0401 GMT), is aimed at countries that "rip off" the U.S. ET (0401 GMT) are targeted at countries who, according to Trump, "rip off" the U.S.

This list includes some of the closest allies of the United States, such as the European Union which was hit by a 20% tax. Vietnam, who benefited from a shift in U.S. supply chain away from China, during Trump's first term trade war with Beijing faces a tariff of 46%.

Trump said that the tariffs were a response to the barriers placed on U.S. products which have hindered American businesses. He also accused Japan and other countries of devaluing currencies in order to gain an advantage in trade, which Tokyo denies.

The Japanese finance minister said on Wednesday that trade negotiations with Washington may include the foreign exchange rate.

Trump has indicated that he might not be done with tariffs.

In remarks made to Republican legislators on Tuesday evening he said that he would announce soon "major" duties on pharmaceutical imports. This is one of the few categories of goods which have been exempted.

(source: Reuters)