US trade policy turmoil shakes the global economy, and other key economic news to know

The announcement of sweeping US tariffs on 2 April threw global trade turmoil into sharper relief, and sent markets reeling.

According to one analysis there hadn’t been a change to the world trading system as significant since the 1947 General Agreement on Trade and Tariffs, a seminal undertaking that kickstarted a long process of undoing trade barriers.

Suddenly, in tandem with other levies enacted this year, the anticipated average effective US tariff rate was pegged at 22.5% – a 20-percentage-point increase compared with the prior year, and its highest level since 1909. The signals this sent in terms of detachment from global cooperation and the international economy in general were, to put it mildly, not well received.

It took only two days for US stocks to shed $5.4 trillion in value, equities in Asia also tumbled, oil prices hit a four-year low, Goldman Sachs pegged the odds of a US recession at 45%, and the IMF warned of significant risk to the global outlook. Perhaps most importantly, a disconcerting bond-market reaction and a US dollar trading near a three-year low each hinted at broader fears about American economic stability.

On 9 April, a week after the dramatic announcement of tariffs, some were put on a 90-day pause – providing only a brief respite. China saw its tariffs raised to a cumulative 145% and responded in kind, before a batch of selective exemptions from the US side further muddied the waters. Experts struggled to find anyone who stands to benefit from this burgeoning trade war, as other parts of the world sorted through additional US tariffs applied separately to cars and vital commodities.

Markets remain unsettled amid alarming projections. This is not just a reaction to tariffs themselves, whether enacted or suspended. It’s a response to a profound sense of policy uncertainty, and a signal of mounting concern over slowing growth, higher inflation, and deteriorating economic conditions.

In the US, some lawmakers in President Donald Trump’s own party sought to give Congress a bigger role in authorizing new tariffs. A legal nonprofit was retained to file a complaint challenging the legality of the levies targeting Chinese imports.

Meanwhile polling suggested that a vast majority of American voters think the new US tariffs will hurt the country’s economy in the short-term – and reflected the largest share of Americans expecting higher inflation since 2022.

Reactions abroad ranged from retaliation to attempted conciliation. Some places, like the European Union, pursued a bit of both.

Canada said it was responding to “unwarranted and unjustified tariffs” with a 25% levy of its own on US goods.

Members of ASEAN, which were confronted with particularly steep and uneven suspended levies as high as 49%, opted to pursue diplomatic responses while pushing for a unified regional strategy that includes leaning more heavily on commerce with one another. They may also now pursue deeper economic integration with China.

The EU is pursuing its own diplomatic responses. It paused its own tariffs applied in response to US levies on steel and aluminium, while nearing a free-trade agreement with India and subtly flagging a potential summit with leaders from Beijing this summer.

Central banks are keeping a watchful eye on things. An interest-rate cut from the European Central Bank seems imminent. In the US, where projected impacts of the upheaval included a loss of about 740,000 jobs over the coming decade, central bankers signaled that an interest rate cut is unlikely for now.

Analysts indicated that the poorest economies are likely to be hit hardest by the tariff wave. This could cause lasting harm to US standing in the developing world.