JOHANNESBURG - Global markets reeled on Friday after President Donald Trump’s tariffs barrage against nearly all United States (US) trading partners as governments looked down the barrel of a seven-day deadline before higher duties take effect.
Stock markets in Hong Kong, London and New York slumped as they digested the turmoil, while weak US employment data added to worries.
Trump announced late on Thursday that dozens of economies, including the European Union, will face new tariff rates of between 10 and 41 per cent.
However, implementation will be on August 7 rather than Friday as previously announced, the White House said. This gives governments a window to rush to strike deals with Washington setting more favourable conditions.
South Africa has been hit with a 30 per cent tariff. However, President Cyril Ramaphosa said on Friday that talks between South African and US officials are continuing and that his government had submitted a Framework Deal that aims to enhance mutually beneficial trade and investment relations. Government is also finalising a package to support companies that are vulnerable to the reciprocal tariffs,
US neighbour Canada, one of the biggest US trade partners, was hit with 35 per cent levies, up from 25 per cent, effective Friday - but with wide-ranging, current exemptions remaining in place.
The tariffs are a demonstration of raw economic power that Trump sees putting US exporters in a stronger position, while encouraging domestic manufacturing by keeping out foreign imports.
However, the muscular approach has raised fears of inflation and other economic fallout in the world’s biggest economy. Trump’s actions come as debate rages over how best to steer the US economy, with the Federal Reserve this week deciding to keep interest rates unchanged, despite massive political pressure from the White House to cut.
Data on Friday showed US job growth missing expectations for July, while unemployment ticked up to 4.2 per cent from 4.1 per cent.
On Wall Street, the S&P 500 dropped 1.6 per cent, while the Nasdaq tumbled 2.2 per cent.
Trump raised duties on around 70 economies, from a current 10 per cent level imposed in April when he unleashed ‘reciprocal’ tariffs, citing unfair trade practices. The new, steeper levels listed in an executive order vary by trading partner. Any goods ‘transshipped’ through other jurisdictions to avoid US duties would be hit with an additional 40 per cent tariff, the order said.
Though Trump’s duties also have a distinctly political flavour, with the president using separate tariffs to pressure Brazil to drop the trial of his far-right ally, former president Jair Bolsonaro.
He also warned of trade consequences for Canada, which faces a different set of duties, after Prime Minister Mark Carney announced plans to recognise a Palestinian state at the UN General Assembly in September.
The tariffs are a demonstration of raw economic power that Trump sees putting US exporters in a stronger position, while encouraging domestic manufacturing by keeping out foreign imports. (Pic: Sourced)