Trump’s Import Tax Cuts are “The Game changer” for the United States and “The Road to Growth and Innovation in the 21st Century”

BANGKOK — Shares tumbled in Europe and Asia and U.S. futures tumbled Thursday following U.S. President Donald Trump ‘s announcement of big increases in tariffs on imports of goods from around the world.

Around midday Thursday, the Dow Jones Industrial Average had tumbled over 1,200 points, or 3%. The broader S&P 500 index sank 4% and the tech-heavy Nasdaq index dropped nearly 5%.

After the U.S. market closed, Trump declared a 10% baseline tax on imports from all countries and higher tariff rates on dozens of nations that run trade surpluses with the United States. The president held up a chart while speaking at the White House, showing the United States would charge a 34% tax on imports from China, a 20% tax on imports from the European Union, and 32% on Taiwan.

Economists warn the new taxes will result in higher prices and slower growth in the United States, while likely pushing many other countries into recession.

The tariffs amount to a nearly nine-fold increase in the prevailing U.S. import tax last year. The size and scope of the levies, announced after the U.S. stock market closed on Wednesday, took many investors by surprise.

“This is a game changer, not only for the U.S. economy but or the global economy,” Olu Sonola of Fitch Ratings wrote in a research note “You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time.”

Just as Trump tried to build a wall against illegal immigration during his first term in the White House, he’s now erecting an economic barrier against global trade, in an effort to restrict imports and encourage domestic manufacturing.

Cars, ships, chips, airplanes, minerals, and medicines will be produced in America, said Trump in the White House Rose Garden. “They’re all coming back to our country because if they don’t, they’ve got a big tax to pay.”

Many factories are getting hit by the trade war and are bracing for higher costs and a loss of export markets. The partners have already said they will retaliate with tariffs of their own.

“Here it comes and we’re already seeing that,” said Tim Fiore, who conducts a monthly survey of factory managers for the Institute for Supply Management. The retaliatory tariffs are going to be very ugly. It’s going to kill demand.

The U.S. launched a trade war in the 1930s. It did not end well. The notorious Smoot-Hawley tariffs are widely thought to have worsened the Great Depression.

“It was bad for consumers, because it meant higher prices,” says former Treasury Secretary Larry Summers. It was bad for producers because it meant higher input costs. And it was bad for peace, because it undermined comity among nations.”

The U.S. is unable to produce coffee and bananas domestically, which is why economists say the new tariffs are even worse.

Drop in the 10-Year Treasury Yields and Implications for the Asian and European Markets after U.S. Announcement of Global Tariffs

The yield on the 10-year Treasury fell as low as 4.11% in the morning from 4.17 late Tuesday and from 4.80% early this year. It later went up to 4.11%. Higher yields can indicate better expectations for the economy.

The price of crude in the U.S. dropped to $69.09 per barrel. The international standard for crude gave up $2.62 to $72.50 per barrel.

The S&P 500 went from a loss of 1.1% to a later gain of 1.1% before closing above 6000 for the first time in a year. It began the week with sharp drops and ended it higher.

Bangkok’s SET shed 1.1% after Thailand was assigned at 36% tariff on its exports to the U.S. Kasem Prunratanamala ofCGS International said in the report that it could cause Thai exports to decline by $7 billion to $8 billion.

The announcement was a major shock, saidYeap Junrong in a commentary. China was hit with an additional 34% tariffs, which brought its total tariffs to over 50% when calculating the previous measures.

Source: Markets in Asia and Europe fall following U.S. announcement of global tariffs

Share Prices in a U.S. Economy: Impact of Heavy Customs Duty and Interest Rate Higgs Boson Decays

Mitsubishi UFJ Financial Group’s shares plunged 7.2% as the potential impact of the 24% tariffs on the export-dependent Japanese economy dashed expectations that the central bank will keep raising interest rates. The group skidded 8%.

Auguring potential losses when U.S. markets reopen on Thursday, the future for the S&P500 dropped 3.1% while the Dow Jones Industrial Average lost 2.5%.