President Donald Trump’s move to impose sweeping tariffs on U.S. imports sparked threats of retaliation on Thursday, as companies and governments rushed to count the costs from an escalating trade war that threatens to shake up global alliances.

The penalties announced on Wednesday unleashed turbulence across world markets and drew condemnation from other leaders facing the end of an era of trade liberalization that has shaped the global order for decades.

Trump said he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of the country’s biggest trading partners, hammering goods from premium Italian coffee and Japanese whisky to sportswear made in Asia.

Facing 54% tariffs on exports to the U.S., the world’s No. 2 economy China vowed countermeasures, as did the European Union, as Washington’s allies and rivals alike criticised moves they fear will deal a devastating blow to global trade.

“Uncertainty will spiral and trigger the rise of further protectionism. The consequences will be dire for millions of people around the globe,” EU chief Ursula von der Leyen said, adding the 27-member bloc was preparing to hit back if talks with Washington failed.

Global stocks tumbled and investors sought safe-haven bonds and gold. According to Fitch Ratings, the new U.S. tariffs are the highest in more than a century.

Barclays and BofA Global Research warned the U.S. economy faced a higher risk of slipping into recession, while Germany’s IW research institute estimated the tariffs would wipe 750 billion euros ($833.63 billion) from the EU economy.

Trump said the “reciprocal” tariffs were a response to duties and other non-tariff barriers put on U.S. goods. He argued that the new levies will boost manufacturing jobs at home.

Vice President JD Vance on Thursday said he knows Americans are worried about costs in the face of what he noted was “a big change” with tariffs, and cautioned that it would take time to see lower prices or more U.S. jobs and manufacturing.

“We know a lot of Americans are worried,” he told Fox News. “What I’d ask folks to appreciate here is that we are not going to fix things overnight.”

The Trump administration was talking to all major trading partners about ways to bring down the new tariffs, Commerce Secretary Howard Lutnick said, stressing that countries needed to treat the U.S. fairly.

Average tariff rates of U.S. and its top 15 trading partners 
US goods trade deficit or surplus with major trading partners in 2024 
Map: Who is hit hardest by proposed US tariffs? 
Who is hit hardest by proposed US tariffs? 

Trump also weighed in on his Truth Social media platform:

“THE OPERATION IS OVER! THE PATIENT LIVED, AND IS HEALING.”

TINY TERRITORIES, UNINHABITED ISLANDS HIT

Among close U.S. allies, the EU was targeted with a 20% rate, Japan with 24%, South Korea with 25% and Taiwan with 32%. Even some tiny territories and uninhabited islands in the Antarctic were hit by tariffs.

Trump’s measures looked set to shake up established trade ties in favour of new relationships.

“Opportunities for new alliances are emerging that we should use determinedly and decisively,” said Robert Habeck, the economy minister of Germany, citing Canada and Mexico as examples.

“Donald Trump buckles under pressure, corrects his announcements under pressure, but the logical consequence is that he must also feel the pressure, and this pressure must now be exerted from Germany, from Europe.”

Trump’s tariffs come at a time when relations with much of Europe have plummeted over issues such as the war in Ukraine and the upending of transatlantic ties, under which the U.S. has acted as the ultimate guarantor of European security.

The issue spilled over into a meeting of the NATO alliance in Brussels on Thursday, where countries questioned the logic of imposing destructive tariffs just as the U.S. was pushing for them to sharply raise their defence spending.

World leaders react to Trump’s tariffs

EUROPEAN COMMISSION PRESIDENT URSULA VON DER LEYEN

“President Trump’s announcement of universal tariffs on the whole world, including the EU, is a major blow to the world economy.”

“Uncertainty will spiral and trigger the rise of further protectionism. The consequences will be dire for millions of people around the globe.”

“We are already finalising a first package of countermeasures in response to tariffs on steel. And we are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail.”

CHINA COMMERCE MINISTRY

“China firmly opposes this and will take countermeasures to safeguard its own rights and interests.”

“There are no winners in trade wars, and there is no way out for protectionism. China urges the U.S. to immediately lift unilateral tariffs and properly resolve differences with its trading partners through dialogue on an equal footing.”

JAPANESE PRIME MINISTER SHIGERU ISHIBA

“Japan is a country that is making the largest amount of investment to the United States, so we wonder if it makes sense for (Washington) to apply uniform tariffs to all countries.”

“We need to consider what’s best for Japan’s national interest. We’re putting all options on the table in considering the most effective response.”

CANADIAN PRIME MINISTER MARK CARNEY

“(Trump) has preserved a number of important elements of our relationship, the commercial relationship between Canada and the United States. But the fentanyl tariffs still remain in place, as do the tariffs for steel and aluminum.”

“We are going to fight these tariffs with countermeasures, we are going to protect our workers, and we are going to build the strongest economy in the G7.”

BRAZILIAN FOREIGN MINISTRY

“The Brazilian government regrets the decision made by the North American government today, April 2, to impose additional tariffs of no more than 10% on all Brazilian exports to that country.”

“The Brazilian government is evaluating all possible actions to ensure reciprocity in bilateral trade, including resorting to the World Trade Organization, in defense of legitimate national interests.”

AUSTRALIAN PRIME MINISTER ANTHONY ALBANESE

“The (Trump) administration’s tariffs have no basis in logic and they go against the basis of our two nations’ partnership. This is not the act of a friend. Today’s decision will add to uncertainty in the global economy and it will push up costs for American households.”

SOUTH KOREAN ACTING PRESIDENT HAN DUCK-SOO

“As the global trade war has become a reality, the government must pour all its capabilities to overcome the trade crisis.”

NEW ZEALAND TRADE MINISTER TODD MCCLAY

“New Zealand’s interests are best served in a world where trade flows freely … New Zealand’s bilateral relationship with the U.S. remains strong. We will be talking with the administration to get more information, and our exporters to better understand the impact this announcement will have.”

SPANISH PRIME MINISTER PEDRO SANCHEZ

“Spain will protect its companies and workers and will continue to be committed to an open world.”

SWEDISH PRIME MINISTER ULF KRISTERSSON

“We don’t want growing trade barriers. We don’t want a trade war … We want to find our way back to a path of trade and cooperation together with the US, so that people in our countries can enjoy a better life.”

SWISS PRESIDENT KARIN KELLER-SUTTER

“(The Federal Council) will quickly determine the next steps. The country’s long-term economic interests are paramount. Adherence to international law and free trade remain core values.”

IRISH PRIME MINISTER MICHEAL MARTIN

“The decision by the U.S. tonight to impose 20% tariffs on imports from across the European Union is deeply regrettable. I strongly believe that tariffs benefit no one. My priority, and that of the government, is to protect Irish jobs and the Irish economy.”

ITALIAN PRIME MINISTER GIORGIA MELONI

“We will do everything we can to work towards an agreement with the United States, with the goal of avoiding a trade war that would inevitably weaken the West in favor of other global players.”

MANFRED WEBER, PRESIDENT OF THE EPP, LARGEST PARTY IN EUROPEAN PARLIAMENT

“To our American friends, today isn’t liberation day – it’s resentment day. Donald Trump’s tariffs don’t defend fair trade; they attack it out of fear and hurt both sides of the Atlantic. Europe stands united, ready to defend its interests, and open to fair, firm talks.”

COLOMBIAN PRESIDENT GUSTAVO PETRO

“We will only make U.S. imports more expensive if they take away our jobs. But we won’t raise tariffs if their goods help create higher-value jobs.”

Economists have warned that tariffs could slow the global economy and increase living costs for the average American family by thousands of dollars.

“If the tariffs stay in place, we think they would add 1-1.5 percentage points to inflation in the near term and subtract a similar amount from GDP, pushing the economy to the precipice of recession,” BofA economists led by Claudio Irigoyen said.

Canada and Mexico, the two largest U.S. trading partners, already face 25% tariffs on many goods and will not face additional levies from Wednesday’s announcement.

They will be hit by a separate set of tariffs on auto imports that will take effect on Thursday.

Spain unveiled a 14.1-billion-euro plan to soften the impact for its economy.

Some of the highest increases fell on Africa, where many of the hardest-hit countries are already struggling with poverty and debt, as well as other severe challenges such as one of the world’s highest rates of HIV/AIDS infections in Lesotho.

Now as the reality of the new tariffs sinks in, companies around the world must weigh up how to adjust, with their options limited and unpalatable for their customers.

“It’s an immense difficulty for Europe. I think it’s also a catastrophe for the United States and for U.S. citizens,” said French Prime Minister François Bayrou.