Trump's new tariffs policy and its suspension: First consequences and global reaction

Contents

1. Possible collapse of the global economy and rising political tensions
2. Concessions or precautions? Trump eases trade pressure
3. How the new customs policy could affect Ukraine
4. One country not hit by tariffs at all

Espreso explains how the world is reacting to this tariff war, what Russia hopes to gain, and what Ukraine should expect.

Possible collapse of the global economy and rising political tensions

Before analyzing the early impact of the new tariffs globally, it's worth noting that the average American shopper won’t escape unscathed from what CNN has already called "the greatest political gamble." Want to buy aged French wine? Expect a 20% duty hike. Fancy a cup of rich Ethiopian coffee? Add 10%. Craving Spanish ham? That’s another 20%.

Of course, the duty increase won’t match the retail price hike directly, since it's calculated from the wholesale customs value. But the average American who enjoys imported products will still be paying more. The same goes for businesses that rely on raw materials the U.S. doesn't produce domestically.

Hlib Vyshlinskyi, director of the Ukrainian Center for Economic Research, says Trump is using this policy to fight the decline of manufacturing in the U.S.

“Trump’s campaign and his steps are like trying to shove toothpaste back in the tube — he's trying to rewind the economy to where it was 30–40 years ago. But the treatment he's offering is already making things worse,” the economist said.

Ukrainian investment banker and financial expert Serhiy Fursa told Espreso that the U.S. economy will be the first to feel the pain from these moves.

“It’s already starting to take losses. This could trigger a crisis in the U.S. economy, and then globally. But America will get hit first,” he said.

The financial expert stressed that these actions have nothing to do with sound politics — and even less with economic logic.

Let’s turn to the countries facing these unilateral tariffs. France, for one, didn’t hold back. French Minister Delegate for Foreign Trade, Laurent Saint-Martin, quoted by Le Figaro, warned that a strong response was on the table.

He said Europe “shouldn’t rule out any options when it comes to goods and services, and should use the full European toolkit, which is quite extensive and can be extremely aggressive in return.”

That includes special tariffs and foreign investment restrictions, which were developed after Trump’s first term in case of renewed U.S. trade pressure.

Donald Trump, photo: gettyimages

The European Commission took a similar tough line.

“We are prepared to respond. 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,” said Commission President Ursula von der Leyen.

Meanwhile, UK Prime Minister Keir Starmer made it clear that Britain isn’t looking for a trade war — but won’t back down either.

“At a moment like this we have to shape our future, we have to step up, we can't be cowed,” said Sir Keir Starmer.

In another statement, he acknowledged that Trump’s tariffs could still affect the UK economy. He stressed that Britain would stay calm and act based on its national interests.

China has also become a key target of the Trump administration’s customs crackdown. Even before this latest trade war, Trump’s March decree had already raised tariffs on Chinese goods from 10% to 20%. The administration justified it as part of its fight against the deadly drug fentanyl — which Trump claims Beijing should be stopping. But later, China was hit with an additional 34% on top of that, along with other countries. That brought the total tariff to 54%, the highest among the new measures.

In response, the Chinese Communist Party struck back — imposing its own 34% tariffs on U.S. goods and rolling out export controls on seven rare earth metals crucial for making computer chips.

The U.S. countered by threatening to bump the 54% tariff up another 50% starting April 9 if China didn’t cave. Beijing didn’t cave.

Concessions or precautions? Trump eases trade pressure

Just a day before previously announced tariffs were set to take effect, Donald Trump told reporters at a press conference that he was open to backing down — if other countries offered him something “phenomenal.”

"If somebody said that we’re going to give you something that’s so phenomenal, as long as they’re giving us something that’s good," said the U.S. president.

Worth noting: this statement came after the steepest stock market drop since the COVID-19 pandemic. The S&P 500 lost around $2.5 trillion in value — falling about 5%. The Russell 2000, which tracks small-cap companies, dropped 20% from its 2021 high. One of the clearest signs of the impact of Trump’s trade moves was the U.S. dollar, which fell 1.5% by April 8.

It’s unclear whether Trump’s latest comments were a response to the market crash and currency slide or if they came because other countries actually wanted to negotiate. But one thing became obvious the next day, April 9: Trump had softened his stance in the “tariff war.” He announced on his social media platform Truth Social that he would introduce new, lower tariffs — 10% — for 78 countries that, according to him, agreed to negotiate and not retaliate.

Based on the fact that over 75 countries have approached U.S. representatives to discuss issues like trade, tariffs, currency manipulation, and non-tariff barriers and that these countries have not taken any countermeasures against the U.S., a 90-day pause and a major reduction in reciprocal tariffs by 10% were  ordered, effective immediately, Trump wrote.

No details were provided about which countries would actually benefit from this relaxation.

At a press conference shortly after announcing the 90-day pause, Trump took questions from reporters and explained his shift, despite stating earlier in the week that he had no plans to delay or cancel tariff hikes on foreign imports. The key theme of his comments was: "You have to have flexibility."

Still, he stood by the tariff hikes overall, saying: "So we’ll see how it all works out. I think it’s going to work out amazing."

Only China seemed to be excluded from any flexibility. The country, which signaled a readiness to hit back fast, got slapped with a 125% tariff from the U.S.

So now, the trade war with China stands at 125% from the U.S. and 118% from China — which has not yet officially responded to Trump’s latest move.

photo: gettyimages

As political analyst Vitaly Portnikov summed up in his column, this is a clash of the world’s three biggest markets.

"Countries that lose access to U.S. markets will try to balance things out by cutting back on American digital services and building up their own. The core conflict here is between the U.S., the EU, and China — these are the three biggest markets in the world," Portnikov said.

How the new customs policy could affect Ukraine

Ukraine was one of the countries that already had one of the lowest tariffs — 10% — even before the easing of restrictions. But politicians and economic experts are divided on how to interpret this rate.

First, let’s look at the numbers: in 2024, Ukraine exported $874 million worth of goods and services to the US. Of that, $363 million came from cast iron and another $112 million from pipes. In return, Ukraine imported $3.4 billion worth of goods from the U.S.

According to Economy Minister Yulia Svyrydenko, Ukraine’s tariffs on U.S. goods are already low — 10% for cars, 0% for coal and oil.

“So now we have a chance to negotiate different terms — the American statement clearly leaves room for that. If things stay as they are, the universal U.S. tariff will mostly hurt small manufacturers. That’s why we’re already working to secure better terms for Ukraine,” she explained.

First Deputy Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy Yaroslav Zheleznyak said Trump’s tariffs “won’t hit Ukraine hard,” since total Ukrainian exports to the U.S. are under $1 billion — just 2% of Ukraine’s overall exports.

Meanwhile, imports from the U.S. are five times higher, he added, which is why Kyiv got the softer 10% rate. Zheleznyak also pointed out that this could even work in Ukraine’s favor.

“There’s a small twist here. Now the EU, China, India, and others will respond by imposing tariffs on U.S. goods too. And that opens a window for us to enter their markets,” the MP predicted on April 3.

On the other hand, Danylo Hetmantsev, head of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, takes a more cautious view.

“In theory, this move will lead to higher import costs, rising prices, a wider trade deficit, and could hurt the economic recovery,” he said.

Also speaking on Espreso, Ivan Us, Candidate of Economic Sciences and Chief Consultant at the National Institute for Strategic Studies, said the earlier decision to raise duties on steel and aluminum is actually what hits Ukraine the hardest.

“That’s because 57.9% of Ukraine’s exports to the U.S. last year were ferrous metal products, mostly cast iron. For Ukrainian cast iron producers, the U.S. is the key market. In fact, 73% of all cast iron exports from Ukraine go to the U.S. Other product categories are smaller, but cast iron is the main one, and that’s where the real problem is,” he said.

One country not hit by tariffs at all

Russia was one of the countries completely untouched by the new tariffs. As Kevin Hassett, director of the White House National Economic Council, explained on ABC News, the decision is tied to ongoing talks on a peaceful resolution to Russia’s war against Ukraine — which, by the way, was hit with 10% tariffs despite also being part of the negotiations.

Talks are currently underway with both Russia and Ukraine, and the president chose not to mix the two issues, Hassett said. Russia is now involved in peace negotiations that affect thousands of lives, and that’s where Trump is focused right now, he added.

Still, Hassett made it clear that holding off on tariffs for Russia doesn’t mean it will get special treatment later.

Meanwhile, Kirill Dmitriev — Putin’s special representative, head of the Russian Direct Investment Fund, and part of Russia’s negotiation team — has already thrown his support behind Trump’s tariff war strategy.

"It would have been easy to ignore the ballooning U.S. debt of over $30 trillion and the growing trade deficit, just like past presidents did. They passed the problem to future generations. But Trump isn’t afraid to take bold steps to stop the country from going bankrupt, bring jobs back, boost investment, and fix the economy. That’s real leadership," Dmitriev wrote.

But things aren’t that simple. As Serhiy Fursa pointed out, even if the tariffs don’t hit Russia directly, the damage will come in other ways.

"Will there be consequences because the tariffs trigger a global economic downturn? Yes, and they already are, just based on the expectation of a slowdown. We’re already seeing a sharp drop in oil prices. No one knows how long that’ll last, but for now, it’s already hurting the Russian budget," the expert said in a comment.

Considering the dramatic spike in tariffs, and then slashing them to 10% in one day for nearly everyone, it’s impossible to say how this trade war, launched by the Trump administration, will play out. And it's equally unclear whether it will escalate into a full-blown confrontation, given Trump’s actions, which come across as either concessions or fear of the all-powerful market. One thing is certain — lasting damage has been done to the foreign policy the U.S. built over decades with its "soft power," and the fallout will definitely ripple across the global map.