Following a wave of retaliatory tariffs from China and the European Union, United States President Donald Trump has urged Americans to remain calm, assuring the public that the trade turmoil will ultimately benefit the nation.
Hours after Washington’s latest tariffs took effect on numerous global trading partners, Beijing retaliated with steep levies—some reaching as high as 84 percent on American products. The European Union quickly followed with its own measures, setting the stage for heightened trade confrontations.
In response to the growing unease in global markets, Trump took to his Truth Social platform, posting: “BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!”
He added in a subsequent post: “THIS IS A GREAT TIME TO BUY!!!”—a message clearly aimed at calming investors amid market volatility.
Despite his assurances, financial markets remained unsettled. Wall Street saw sharp fluctuations, while European and Asian indices dropped significantly. A decline in oil prices and a sell-off in US government bonds further rattled investors, reflecting deep concerns about the implications of the widening trade conflict.
During a private event with Republican allies, Trump doubled down on his stance, stating: “I’m telling you, these countries are calling us up kissing my ass.” He also claimed that multiple nations, including Japan and South Korea, were actively pursuing new trade agreements with the US.
Tensions escalated after Trump announced an increase in tariffs on Chinese goods—raising the rate to a striking 104 percent. China, which had initially planned a 34 percent tariff in response, upped its own duties to 84 percent.
China’s Ministry of Finance criticized the American approach, declaring: “The tariff escalation against China by the United States simply piles mistakes on top of mistakes.”
The European Union, reacting to US tariffs on steel and aluminum, introduced countermeasures that will affect over €20 billion worth of American exports, including soybeans, motorcycles, and cosmetics. The bloc emphasized its openness to diplomacy, noting: “These countermeasures can be suspended at any time, should the US agree to a fair and balanced negotiated outcome.”
Germany’s newly selected leader, Friedrich Merz, called for a unified approach across Europe, stressing the need for a “joint European response” to the evolving trade challenges as he introduced a new coalition deal.
While Trump has been assertive in his trade strategy, members of his administration have offered both stern warnings and potential paths to compromise. US Treasury Secretary Scott Bessent, speaking at a financial summit, cautioned nations against siding with China, saying: “Aligning with Beijing would be cutting your own throat.”
However, Bessent also suggested that the announced US tariff levels could be negotiable, stating they represent “a ceiling, if you don’t retaliate.”
Trump continues to argue that these trade actions will drive a resurgence in American manufacturing and reduce reliance on foreign production, particularly targeting what he sees as unfair trade practices from China, including overproduction and dumping.
Yet many economic analysts have raised alarms about the risks associated with the intensifying trade dispute. The Chinese government, in a possible diplomatic jab, advised its citizens to “fully assess the risks” before traveling to the US.
In Panama, amid broader geopolitical tensions, US Defense Secretary Pete Hegseth responded to growing concerns, condemning China’s “threats” in relation to influence over the Panama Canal.
Experts have cautioned that the path Trump envisions—one where global companies relocate to the US—may take years to materialize, if at all. Some fear it could spark inflation or even tip the economy into recession.
Since the escalation began last week, trillions of dollars in market value have been wiped out. US stocks wavered in early trading, while European markets plunged nearly three percent. In Asia, Tokyo’s Nikkei closed down almost four percent. Oil prices also slipped below $60 a barrel—their lowest point in four years.
Perhaps most concerning for economists is the upward trend in government bond yields, signaling higher borrowing costs for nations such as the US, Japan, and the UK—an indicator often linked with economic stress.
