Trump announces worldwide tariffs as fears of global recession, trade war grow

(CN) — U.S. President Donald Trump imposed a raft of tariffs on Wednesday that could trigger a global recession and a catastrophic trade war among the world’s biggest economies.

Dubbing Wednesday “Liberation Day,” Trump showed he was determined to carry onwith a trade war that the White House says will turn America into “a manufacturing superpower” by rebalancing trade through tough tariffs. He’s alreadyslapped tariffs, which are basically import taxes, on aluminum, steel and automobiles.

He announced new tariffs on individual countries, including 20% on the European Union imports and 34% on Chinese goods, and imposed a blanket tariff of 10% on all imports. In announcing the tariffs, Trump fulfilled a campaign promise to turn the U.S. into a tariff fortress and raise duties on imports to levels not seen since the 1930s.

“April 2, 2025 will forever be remembered as the day American industry was reborn,” Trump said during a Rose Garden event. “For decades our country has been looted, pillaged, raped and plundered by nations near and far,” by both allies and adversaries, he added.

Economists, though, broadly agree that Trump’s tariff policy will be disastrous both for the U.S. economy and the world economy, potentially bringing to a grinding halt a postwar era of ever-more-global commerce built around common trade rules.

In the past six weeks, stock markets have been hit with a $5 trillion sell-off and Goldman Sachs raised its odds of a recession to 35%. Markets were jittery on Wednesday as the world prepared for the fallout from Trump’s Rose Garden afternoon announcement.

China, the European Union, Japan, Canada and many of the other major economies have vowed to hit back at American tariffs.

To the dismay of economists and American allies and foes alike, Trump and many of his closest aides in the White House ascribe to a theory that tariffs are a solution to America’s economic problems. They believe the tariffs will bring in billions of dollars in revenues, force foreign companies to move operations to the U.S. and foster homegrown industries.

“They’re not going to be wrong, it is going to work,” said Karoline Leavitt, the White House press secretary, on Tuesday. “We are focused on restoring the golden age of America and making America a manufacturing superpower.”

Since the 1980s, Trump has talked about the need for tariffs against nations that have a trade surplus with the U.S. and he’s blasted others for imposing tariffs on U.S. goods. He says “tariffs” is one of his favorite words in the dictionary.

But most economic experts see Trump’s levies on foreign goods as wrong-headed and disastrous because they will disrupt trade, gum up complicated global supply chains, cause inflation and job losses and shrink profits. Fears are growing that Trump will usher in so-called stagflation — a situation where prices are rising but growth is flat or in decline.

“I do think that we are headed for a recession, and an inflationary/stagflationary one at that,” said Mark Vail, a political economist at Wake Forest University, in an email. “The sad thing is that the recession and the spike in inflation that is certain to come if these tariffs are implemented and maintained will be entirely self-inflicted.”

Vail said Trump seems sincerely committed to a “new economic-policy paradigm” built around tariffs and he doubted the president sees them merely as a negotiating tactic to extract concessions from competitors.

“I think that the administration (at least from what we can tell publicly) underestimates their likely costs and overestimates their likely benefits,” he said. “The policy taken as a whole is hopelessly incoherent.”

He said the tariffs threat already has weakened consumer confidence and raised fears about inflation.

“These dynamics tend to be self-reinforcing and operate like self-fulfilling prophecies,” Vail said. “These effects are also likely to hit Trump’s rural constituencies particularly hard, as many rely on exports to Europe and China.”

Faced with mounting discontent and fear over his tariffs policy, Trump has tried to prepare the American public by saying there will be short-term pain.

“They’re about protecting the soul of our country. Tariffs are about making America rich again and making America great again,” Trumpsaid in his joint address to Congress last month. “And it’s happening. And it will happen rather quickly. There’ll be a little disturbance, but we’re OK with that. It won’t be much.”

Meanwhile, his Republican allies are lining up to defend his plans.

“There’s absolutely going to be short-term pain,” said Republican Senator Tim Sheehy of Montana,speaking on CNN. “The president’s been clear about that, everyone has.”

He likened the tariffs to the temporary discomfort people feel as their house is remodeled. “The reality is that remodels got to happen in order to make things stronger and more stable on the backend,” Sheehy said.

In February, the Yale Budget Labcalculated that Trump’s proposals to impose tariffs that match duties set by other countries on U.S. goods, or the cost of value-added tax rates, would amount to a 13 percentage point hike in the U.S. effective tariff rate, making it the highest since 1937.

The Yale Budget Lab said the tariffs could lead to an overall hike in prices between 1.7% and 2.1%, translating to a loss of between $2,700 and $3,400 for the average household.

The Yale researchers also found that while tariffs would weaken America’s gross domestic product, they would raise between $2.7 trillion and $3.5 trillion in revenue between 2026 and 2035. Trump is looking to raise revenues to offset tax cuts.

There are concerns Trump’s trade policy may trigger a downward spiral similar to what happened in the late 1920s and 1930s when a slew of tariffs contributed to the Great Depression. Back then, governments imposed duties in the hope they would offset the economic downturn. Instead, global trade dropped precipitously and inflicted serious damage around the world.

Trump is endangering a post-war system that regulates international money flows and trade under rules set by the World Bank, the International Monetary Fund and the World Trade Organization.

Courthouse News reporter Cain Burdeau is based in the European Union.

Follow @cainburdeau