WASHINGTON — President Donald Trump announced far-reaching new tariffs Wednesday on nearly all U.S. trading partners — a 34% tax on imports from China and 20% on the European Union, among others — that threaten to dismantle much of the architecture of the global economy and trigger broader trade wars.
Trump, in a Rose Garden announcement, said he placed elevated tariff rates on dozens of nations that run trade surpluses with the United States, while imposing a 10% baseline tax on imports from all countries in response to what he called an economic emergency.
The president, who said the tariffs were designed to boost domestic manufacturing, used aggressive rhetoric to describe a global trade system that the United States helped to build after World War II, saying “our country has been looted, pillaged, raped, plundered” by other nations.
President Donald Trump speaks Wednesday during an event to announce new tariffs in the Rose Garden at the White House in Washington.
The action amounts to a historic tax hike that could push the global order to a breaking point. It kick-starts what could be a painful transition for many Americans as middle-class essentials such as housing, autos and clothing are expected to become more costly, while disrupting the alliances built to ensure peace and economic stability.
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Trump said he acted to bring in hundreds of billions in new revenue to the U.S. government and restore fairness to global trade.
The taxes fulfill a key campaign promise as he imposed what he called “reciprocal” tariffs on trade partners, acting without Congress under the 1977 International Emergency Powers Act. But his action Wednesday could undermine the voter mandate last year to combat inflation that helped return him to the White House after a four-year hiatus, a choice that could carry tremendous economic risks for the public.
Containers are stacked Wednesday at the Port of Los Angeles.
“With today’s announcement, U.S. tariffs will approach levels not seen since the Smoot-Hawley Tariff Act of 1930, which incited a global trade war and deepened the Great Depression,” said Scott Lincicome and Colin Grabow of the Cato Institute, a libertarian think tank.
The president’s higher rates would hit foreign entities that sell more goods to the United States than they buy, meaning the tariffs could stay in place for some time as the administration expects other nations to lower their tariffs and other barriers to trade that it says led to a $1.2 trillion trade imbalance last year.
The new tariffs will come on top of recent announcements of 25% taxes on auto imports; levies against China, Canada and Mexico; and expanded trade penalties on steel and aluminum. Trump has also imposed tariffs on countries that import oil from Venezuela and he plans separate import taxes on pharmaceutical drugs, lumber, copper and computer chips.
Threats of backlash
Senior administration officials, who insisted on anonymity to preview the new tariffs with reporters ahead of Trump’s speech, said the taxes would raise hundreds of billions of dollars annually in revenues.
They said the 10% baseline rate existed to help ensure compliance, while the higher rates were based on the trade deficits run with other nations and then halved to reach the numbers that Trump presented in the Rose Garden.
The 10% rate would be collected starting Saturday and the higher rates would be collected beginning April 9.
Based on the possibility of broad tariffs floated by some White House aides, most outside analyses by banks and think tanks see an economy tarnished by higher prices and stagnating growth.
Rep. Suzan DelBene, D-Wash., said the tariffs are “part of the chaos and dysfunction” being generated across the Trump administration. The chair of the Democratic Congressional Campaign Committee stressed that Trump should not have the sole authority to raise taxes as he intends without getting lawmakers’ approval, saying that Republicans so far have been “blindly loyal.”
“The president shouldn’t be able to do that,” DelBene said. “This is a massive tax increase on American families, and it’s without a vote in Congress. … President Trump promised on the campaign trail that he would lower costs on day one. Now he says he doesn’t care if prices go up — he’s broken his promise.”
Even Republicans who trust Trump’s instincts have acknowledged that the tariffs could disrupt an economy with an otherwise healthy 4.1 % unemployment rate.
“We’ll see how it all develops,” said House Speaker Mike Johnson, R-La. “It may be rocky in the beginning. But I think that this will make sense for Americans and help all Americans.”
Allies brace
Longtime trading partners are preparing their own countermeasures. Canada imposed some in response to the 25% tariffs that Trump tied to the trafficking of fentanyl. The European Union, in response to the steel and aluminum tariffs, put taxes on $28 billion worth of U.S. goods, including on bourbon, which prompted Trump to threaten a 200% tariff on European alcohol.
A sign advising that products from the U.S. affected by a tariff will be marked with a symbol is seen Wednesday in a grocery store in Ottawa.
Many allies feel they were reluctantly drawn into a confrontation by Trump, who routinely says America’s friends and foes have essentially ripped off the United States with a mix of tariffs and other trade barriers.
“Europe has not started this confrontation,” said European Commission President Ursula von der Leyen. “We do not necessarily want to retaliate but, if it is necessary, we have a strong plan to retaliate and we will use it.”
Italy’s conservative premier, Giorgia Meloni, reiterated her call Wednesday to avoid an EU-US trade war, saying it would harm both sides and would have “heavy” consequences for her country’s economy.
Because Trump had hyped his tariffs without providing specifics until Wednesday after U.S. markets closed, he provided a deeper sense of uncertainty for the world, a sign that the economic slowdown could possibly extend beyond U.S. borders to other nations that would see one person to blame.
4 strategies to navigate market volatility in 2025
Navigating market volatility in 2025
After reaching all-time highs in February, U.S. markets have experienced notable volatility amidst a flurry of news regarding tariffs and rapid changes in the geopolitical landscape. The S&P 500 is now negative for the year, having declined nearly 9% from its mid-February peak (as of March 31, 2025), while the tech-heavy Nasdaq briefly entered correction territory in early March, and is down over 9%. This pullback has effectively erased the post-election gains, explains, and investors have been seeking safe havens like bonds and gold.
Understanding Current Volatility Drivers
Market weakness has been driven primarily by high levels of uncertainty rather than any meaningful change to economic fundamentals. Investors dislike uncertainty in any form, and are experiencing it through multiple channels.
While investors get tariff headlines multiple times a day, they still don't know: Will all the proposed tariffs actually go into place? How long will they last? What might ultimate settlements look like? How will consumers respond? How will manufacturers respond, domestically and abroad?
The past several weeks have made it clear that proposals and threats can change at any moment. Unpredictable policy leads investors to reduce risk exposure and keep capital on the sidelines, at least temporarily until they have a better sense of the playing field.
Contextualizing Market Pullbacks
While there has been impressive performance in equity markets for two consecutive years, pullbacks are normal. On average, the S&P 500 has seen a correction, or decline of at least 10%, every year going back to 1928. Declines of 5% are even more common, occurring over three times per year on average over that period. In spite of these regular drawdowns, the S&P 500 has managed strong double-digit returns over the past 100 years. In many instances, pullbacks can be healthy for durable market returns, curbing.
Portfolio Diversification Demonstrating Value
This volatility has reinforced the benefits that diversification can offer across both asset classes and geographic regions. Thus far this year, while the S&P 500 is down over 4% as of March 31, 2025, the market has seen:
- International equity strength: European equities have delivered their best relative performance to start the year since 2000, with double-digit gains during the first two months of 2025. Emerging markets are also showing gains against U.S. market declines.
- Fixed income outperformance: Bonds are up over 2% for the year while U.S. equities have declined, demonstrating their essential role as portfolio stabilizers during market turbulence.
Foreign markets entered the year in a very different place than U.S. equities. International stock valuations were at historical levels of discount vs. U.S. stock valuations. Many international economies are also significantly earlier in their economic cycle (meaning they have seen recessions more recently) than the U.S., setting the framework for a longer potential period of future economic growth. At the same time, investors have been meaningfully underweight in international equities relative to historical levels. All of these factors are contributing to the outperformance of international stocks seen year-to-date.
Meanwhile, bonds are acting as a hedge against a potential economic slowdown in the U.S. Domestic consumers and businesses are grappling with monetary policy that has been restrictive for an extended period of time and significant uncertainty related to trade policy. As investors grow concerned about the potential impact to the economy, they bet that the Fed may have to ease and bring rates lower in the future than they are today. This causes bond prices to rise, offsetting weakness in the equity markets.
Medium-term, U.S. equity markets can be a great place to be invested. Some of the highest quality companies in the world are in the S&P 500—these businesses can grow earnings regardless of economic pressures. The Fed also has the capacity to stimulate the economy should growth and corporate earnings come under meaningful pressure.
However, other regions of the world can generate attractive returns, especially given relative valuations and greenshoots as it relates to international earnings. And diversification can help ensure balanced returns in periods of temporary weakness in a particular region or asset class.
Strategic Actions for Investors
During periods of elevated volatility, here's what disciplined investors can do:
1. Strategic Tax-Loss Harvesting
Market declines create valuable opportunities. Identifying positions with unrealized losses while maintaining market exposure through temporary substitutes can generate significant tax benefits. Ideally, you've implemented automated harvesting processes to capitalize on volatility without making emotional decisions during market stress.
2. Portfolio Rebalancing
Market movements naturally shift allocations away from targets. Given the recent move lower in equities and appreciation of bonds, you may have experienced drift relative to your target allocations. Rather than relying solely on calendar-based approaches, consider a volatility-based rebalancing strategy that responds directly to market conditions. This approach allows portfolios to systematically "buy low and sell high" by trimming outperformers and adding to underperforming assets.
3. Opportunistic Capital Deployment
For investors with available capital to deploy, you can take advantage of better entry points into U.S. equity markets compared to recent market highs. Historical data suggests that after a 5% pullback, average stock returns one year later are around 12% and markets are higher 75% of the time.
4. Stick to Your Plan
Perhaps most critically, avoid reactive decisions driven by headlines or short-term market movements. If you have a financial plan, remember that it already incorporates scenarios of significant market stress. Stay disciplined—the benefit of having a plan is you aren't forced to sell at inopportune times because you took too much risk or lacked confidence in your positioning.
During volatile times, you can also take a moment to revisit your long-term goals. This helps you stay focused and keep things in perspective. Try to limit how much you're watching the daily market news; it can often lead to knee-jerk reactions.
Conclusion
While market drawdowns can be stressful, data shows that if you are invested for decades, the negative impacts of short-term market movements are dwarfed by the long-term positives of compounding returns. There can be a significant upside in staying disciplined and taking advantage of the opportunities created by market volatility.
was produced by and reviewed and distributed by Stacker.
