Sweeping Trump tariffs shock global economy, drawing threats and calls for talks

Trump has described the import taxes, ranging from 10% to 49%, as a way to reverse unfair treatment by American trading partners and draw factories and jobs back home.

Setting off for Florida from the White House on Thursday, he struck an optimistic note. “I think it’s going very well.”

“The markets are going to boom, the stock is going to boom and the country is going to boom,” Trump said.

China, a key exporter to the U.S. of everything from clothing to kitchenware, has already announced a raft of retaliatory measures expected to raise prices for U.S. consumers.

“There are no winners in trade wars and tariff wars,” China's Foreign Ministry spokesperson Guo Jiakun said. “It's clear to everyone that more and more countries are opposing the unilateral bullying actions of the U.S."

French President Emmanuel Macron met with representatives from key commercial sectors affected by the tariffs, like wines and spirits, cosmetics and aircraft, after urging businesses to suspend all investments in the U.S. “What would be the message of having major European players investing billions of euros in the American economy at a time when they’re hitting us?” Macron asked.

European Commission President Ursula von der Leyen denounced Trump's levies as a “major blow to the world economy” but held off announcing new countermeasures. She said the commission — which handles trade issues for the 27 EU member countries — was “always ready” to talk.

Analysts say there’s little to be gained from an all-out trade war, since higher tariffs can restrain growth and raise inflation.

“Europe will have to respond, but the paradox is that the EU would be better off doing nothing,” said Matteo Villa, a senior analyst at Italy’s Institute for International Political Studies.

“Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “The hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.”

Italian Prime Minister Giorgia Meloni told Italian state TV on Thursday that she hoped for exactly that.

“We need to open an honest discussion on the matter with the Americans, with the goal — at least from my point of view— of removing tariffs, not multiplying them,’’ Meloni said.

Europe's strategy so far has been to limit retaliation to a few politically sensitive goods, like whiskey and Harley-Davidson motorcycles, in an attempt to push the U.S. to the negotiating table.

Economists say that Europe could broaden the trade war to the vast services sector by targeting Big Tech — a category more vulnerable to retaliation because the U.S. exports more than it imports.

The EU response could include a tax on U.S. digital giants such as Google, Apple, Meta, Amazon and Microsoft, as French officials have recommended.

Outgoing German Chancellor Olaf Scholz said the EU "must show that we have strong muscles.” But he expressed no appetite for sparking an all-out trade war that could hobble the bloc's export-dependent economy.

“An agreement,” he said, "is best for prosperity in the U.S., for prosperity in Europe and for prosperity in the world.”

British Prime Minister Kier Starmer said his government would react with “cool and calm heads," telling business leaders in London that he hoped to strike a trade deal with the U.S. that would see the tariffs rescinded.

“Nobody wins in a trade war, that is not in our national interest,” Starmer said.

Japan, the biggest foreign investor in the U.S. and its closest ally in Asia, plans to assess the impact of the tariffs, Chief Cabinet Secretary Yoshimasa Hayashi said, displaying a more conciliatory approach.

The round of tariffs jolted financial markets, with the U.S. Standard & Poors 500 off 3.7% in afternoon trading.

The STOXX Europe 600 index fell 2.7% and a 2.8% drop in Tokyo’s benchmark led losses in Asia. Oil prices sank more than $2 a barrel. Analysts fished for superlatives to convey the disruption to the global trading order as Trump's announcement overturned decades of efforts to lower tariffs through free trade agreements and negotiations.

“The magnitude of the rollout — both in scale and speed — wasn’t just aggressive; it was a full-throttle macro disruption,” Stephen Innes of SPI Asset Management said.

With an average tariff of 25%-30%, the highest since the early 20th century, the U.S. has initiated a “radical policy reordering,”said Deutsche Bank's Jim Reid.

The head of the World Trade Organization warned that U.S. protectionist measures will likely cause global trade volumes to drop by about 1% this year.

“I’m deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade,” said WTO Director-General Ngozi Iweala-Okonjo.

The tariffs are not paid by the foreign countries they target, but by the U.S.-based companies that buy the goods to sell to Americans.

Now companies must decide whether to absorb the new taxes or pass them on to consumers in the form of higher prices.

The makers of Italy’s Parmigiano Reggiano cheese, for instance, say the new tariffs mean U.S. consumers will pay more for their crumbly pasta topping.

“Americans continued to choose us even when the price went up” after an earlier round of Trump tariffs in 2019, said Nicola Bertinelli, president of the Parmigian Reggiano Consortium. “Putting tariffs on a product like ours, only increases the price for American consumers, without protecting local producers."

The Consumer Brands Association, which represents big food companies like Coca-Cola and General Mills as well as consumer product makers like Procter & Gamble, warned that although its businesses make most of their goods in the U.S., they now face tariffs on critical ingredients — like wood pulp for toilet paper or cinnamon — that must be imported because of domestic scarcity.

“We encourage President Trump and his trade advisors to fine-tune their approach and exempt key ingredients and inputs in order to protect manufacturing jobs and prevent unnecessary inflation at the grocery store,” said Tom Madrecki, the association’s vice-president of supply chain resiliency.

A eye-popping 29% tariff imposed on Norfolk Island came as a shock to the remote South Pacific outpost's 2,000 inhabitants, particularly as its governing nation, Australia, was hit with a far lower tariff of 10%.

“To my knowledge, we do not export anything to the United States,” Norfolk Island Administrator George Plant, the Australian government’s representative on the island, said Thursday. “We’re scratching our heads here.”

Vladimir Putin’s Russia, meanwhile, was left off Trump’s list.

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AP journalists around the world contributed to this story.