What to know
- The Trump administration's aggressive global tariff regime against imported goods from some of its closest allies has drawn strong reactions across the board.
- Long-standing U.S. allies across most of the world's largest economies reacted with a mixture of anger and despair as they vowed retaliatory tariffs and hinted at some of the measures they plan to use to soften the blow to their own economies.
- Countries seeking to sell goods to the United States will face taxes as high as 54% based on how the White House is calculating duties on U.S. exports, as well as "nonmonetary" trade barriers in response to countries' doing such things as manipulating their currencies or serving as "pollution havens."
- Global markets reacted sharply and swiftly, with investors pulling money out of U.S. shares and the stocks of other companies that rely on global supply chains.
- The steep tariffs are raising consumer fears that higher prices are on the way, with the industrial, retail, consumer and automotive sectors all feeling the pain.
Administration officials and their allies offer conflicting messages
Trump this week officially fulfilled a campaign promise to unleash sweeping tariffs, a move that has sparked fears of a global trade war and prompted a major question about what has become the centerpiece of his economic agenda: What’s his endgame?
In both size and scope, Trump’s ultimate blueprint for global tariffs — a 10% baseline tariff on virtually every country, with higher numbers on countries with which the United States has larger trade deficits — was more than most expected. It has left global financial markets tumbling and Trump’s Republican supporters trying to thread the political needle of not criticizing him while also understanding the economic peril the tariff plan may usher in ahead of 2026 midterm elections in which the GOP will try to defend its slim House and Senate majorities.
Trump’s team has so far not had a clear message to either explain the strategy behind the tariffs that his political allies can echo or his thought process behind the decision to go much further than even supporters were expecting.
What’s more, multiple elements of the sweeping measures made it seem as if the administration rushed through the process.
'Recession pop' re-emerges along with economic worries
Positive, catchy and carefree “recession pop” is back. The chart-topping pop music brought joy to many during the Great Recession in the late 2000s.
And as economic fears return, there's a resurgence of new hits from millennial-era superstars.
Tariffs could cost the average household $3,800 per year
The ripple effects of Trump’s new wave of sweeping tariffs will be felt the most by lower-income people in the United States, who are heavily reliant on products from countries hit the hardest by Trump’s tariffs and have less disposable income to absorb higher prices.
Trump is placing some of his highest tariffs on goods coming from countries making the low-cost products that line the shelves of discount retailers. Products from Vietnam, Sri Lanka and Cambodia, for instance, will have tariffs of more than 40% — that is, now importers will need to pay 40% of the value of those goods to Customs and Border Protection at ports of entry to get them into the country. Goods from China will have a total of more than 70% worth of additional tariffs.
While Trump campaigned on a pledge to lower prices for struggling families, his tariffs are expected to increase the cost of everything from kids’ shoes to fresh produce, according to economists and business executives. The total impact from the tariffs announced since Trump took office could cost the average household $3,800 per year, according to an analysis by the Budget Lab at Yale University.
JPMorgan chief economist: Odds of global recession climb to 60% under plan
The odds of a global recession will rise to 60% if Trump’s tariff plan goes forward as initially presented, according to Bruce Kasman, chief economist at JPMorgan.
Kasman had set the likelihood at 40%.
“We are not making immediate changes to our forecasts and want to see the initial implementation and negotiation process that takes hold. However, we view the full implementation of announced policies as a substantial macroeconomic shock not currently incorporated in our forecasts,” he wrote to clients in a note today. “We thus emphasize that these policies, if sustained, would likely push the [U.S.] and possibly global economy into recession this year.”
Trump says tariffs may be leverage in TikTok discussions
Trump defended his tariffs to reporters aboard Air Force One today, characterizing his decision to place penalties on imports from more than 180 countries and territories as a negotiating tactic to spur U.S. investments and aid in important business decisions, including the sale of TikTok.
“We have a situation with TikTok where China will probably say, 'We’ll approve a deal, but will you do something on the tariff?' The tariffs give us great power to negotiate," Trump said.
Trump signed an order in January giving TikTok’s Chinese-based owner, ByteDance, until Saturday to sell the platform to a non-Chinese buyer or face a nationwide ban.
Trump told reporters today that “we’re very close to a deal” on TikTok. It is unclear whether Chinese officials have tried to tie the platform to tariffs amid the negotiations over its ownership.
Federal Reserve not likely to rescue markets and economy from tariff turmoil anytime soon
Now that Trump has set out his landmark tariff plans, the Federal Reserve finds itself in a potential policy box to choose among fighting inflation, boosting growth — or simply avoiding the fray and letting events take their course without intervention.
Should Trump hold fast to his tougher-than-expected trade policy, there’s a material risk of at least near-term costs, namely the potential for higher prices and a slowdown in growth that could turn into a recession.
For the Fed, that presents a potential no-win situation.
The central bank is tasked with using its policy levers to ensure full employment and low prices, the so-called dual mandate of which policymakers speak. If tariffs present challenges to both, choosing whether to ease to support growth or tighten to fight inflation won’t be easy, as each courts its own peril.
'A good first step': One industry embraces tariffs
As Trump’s announcement of far-reaching tariffs sent shock waves, many in the nation’s struggling domestic shrimp industry welcomed the move.
The executive director of the Southern Shrimp Alliance, John Williams, said in a statement that the trade association was “grateful” for the administration’s actions.
The president of the alliance, Steve Bosarge, who owns a fleet of shrimp boats in Pascagoula, Mississippi, told NBC News, “I think it’s a good first step for us.”
Much of the shrimp that’s consumed in the United States is imported. An investigation found that some top exporters, including Ecuador, India, Indonesia and Vietnam, have subsidized or dumped shrimp in the United States. The countries are all subject to Trump’s tariffs.
“I hope that we can work towards leveling the playing field,” Bosarge said. “I hope these tariffs will give some incentives for countries to do what’s right.”
Leann Bosarge, who works alongside her father, said that fuel is their largest expense and that she wasn’t expecting increased costs to their company. She hopes increased revenue might offset any.
“It was so refreshing to have someone finally realize that we feed America and letting America outsource its food production to the point that your domestic industry can no longer survive — that’s just a bad decision."
More: Stock market plunges after tariff announcement
Markets record worst one-day loss since pandemic
Major U.S. stock indexes had their worst one-day drawdowns since the onset of the pandemic today.
The S&P 500 fell 4.8%, while the Nasdaq fell 6% — their worsts since 2020. The Dow Jones Industrial Average declined 4%, or more than 1,600 points— its worst sell-off since 2022.
Small-cap benchmark Russell 2000 becomes first major U.S. stock measure to enter bear market
Small-cap stocks, which were once thought to be primary beneficiaries of Trump’s policies, entered bear market territory today after a massive stock market rout that followed the administration’s sweeping and aggressive tariff rollout.
The Russell 2000 Index was down about 6%, bringing its losses from its Nov. 25 record close to around 22%. On Wall Street, a 10% pullback is considered a correction, but a 20% decline is a bear market. The S&P 500 and the Nasdaq Composite are both in correction territory, while the Dow Jones Industrial Average is just below that mark.
“They’re getting hit because the economy is softening. That’s going to hurt profits,” Keith Lerner, co-chief investment officer at Truist, told CNBC. “On the other side, they’re still paying high levels of interest payments on debt because they have more of this floating-rate debt.”
“They’re getting squeezed on both sides,” he said.