29pc tariff imposed on Pakistan as Trump’s sweeping import levies amp up global trade war

US President Donald Trump on Thursday imposed a 29 per cent tariff on goods the United States imports from Pakistan, along with higher duties on dozens of countries from rivals to allies and 10pc levies on most imports to his country, intensifying a global trade war.

The US imposed 29pc reciprocal tariffs on Pakistan, which charges the US 58pc, according to a board that Trump held during his announcement.

The sweeping duties announced against the serene backdrop of the White House Rose Garden on Wednesday immediately unleashed turbulence across world markets and drew condemnation from other leaders now faced with the end of decades of trade liberalisation that have shaped the global order.

What we know so far:

• China urges US to immediately lift tariffs, vows retaliation
• Australia says tariffs ‘not act of a friend’ but rules out reciprocal move
• European leaders react with dismay
• Canada and Mexico to not face tariffs in addition to previous 25pc levies

Maleeha Lodhi, Pakistan’s former ambassador to the US, noted that the country would be affected by Trump’s tariffs, considering the US was a major trade partner.

Pakistan’s textile sector, whose majority exports go to the US, will “experience a shock and the low margin categories of textile will be exposed”, Lodhi told Geo News.

“Pakistan will have to see how it adjusts,” she said, adding that the country would have to search for “more markets, and Pakistan will have to see how to make its exports more competitive”.

“We don’t have a choice. Whether America imposes tariffs on us or not, our exports performance are determined in Islamabad, not Washington,” Lodhi said. “For that, we need reforms, we need to diversify, widen the export base. We need to, in my opinion, give importance to that,” she added.

As for the global economy, the former envoy noted this was a very “negative development”, adding that China and the European Union would have a significant role to play, considering their relationship with the US.

Michael Kugelman, an expert on Washington’s relations with South Asian nations, noted on X that “textiles (main export for Pakistan and Bangladesh) could be quite impacted” as a result of the new levies.

Kugelman observed that the four South Asian nations of India, Pakistan, Bangladesh and Sri Lanka were “already dealing [with] economic stress”.

As Asia awoke to the news on Thursday, Japan’s Nikkei hit an eight-month low while US and European stock futures dropped sharply following weeks of volatile trading. US stocks have erased nearly $5 trillion of value since mid-February.

China, the world’s second-largest economy, faced with a fresh 34pc tariff on top of the 20pc Trump previously imposed, urged the United States to immediately cancel its latest levies and vowed countermeasures.

The US slapped a 26pc tariff on imports from India but exempted pharmaceutical exports, bringing cheer to India’s pharma industry.

US Treasury chief Scott Bessent urged other nations not to retaliate, moves that could lead to dramatically higher prices for consumers on everything from bicycles to wine. “If you retaliate, that’s how we get escalation,” Bessent told CNN.

Close US allies were not spared Trump’s ire, including the European Union, which faces a 20pc tariff, and Japan, which is targeted for a 24pc rate. Tokyo said it was leaving all options to respond to the “extremely regrettable” duties.

The base 10pc tariffs go into effect on April 5 and the higher reciprocal rates on April 9.

The effective US import tax rate has shot to 22pc under Trump from just 2.5pc in 2024, according to the head of US research at Fitch Ratings.

“That rate was last seen around 1910,” Olu Sonola said in a statement. “This is a game-changer, not only for the US economy but for the global economy. Many countries will likely end up in a recession. You can throw most forecasts out the door if this tariff rate stays on for an extended period of time.”

The “reciprocal” tariffs, Trump said, were a response to duties and other non-tariff barriers put on US goods. He argued that the new levies will boost manufacturing jobs at home.

“For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” Trump said.

Outside economists have warned that tariffs could slow the global economy, raise the risk of recession, and increase living costs for the average US family by thousands of dollars.

Even some fellow Republicans have expressed concern about Trump’s aggressive trade policy.

Within hours of Wednesday’s announcement, the Senate voted 51-48 to approve legislation that would terminate Trump’s Canadian tariffs, with a handful of Republicans breaking with the president. Passage in the Republican-controlled US House of Representatives, however, was seen as unlikely.

Trump’s top economist, Stephen Miran, told Fox Business on Wednesday that the tariffs would work out well for the US in the long run, even if they cause some initial disruption.

“Are there going to be short-term bumps as a result? Absolutely,” Miran, the chairman of Trump’s Council of Economic Advisors, told the network’s ‘Kudlow’ programme.

Ending ‘de minimis’

The reciprocal tariffs do not apply to certain goods, including copper, pharmaceuticals, semiconductors, lumber, gold, energy and “certain minerals that are not available in the United States”, according to a White House fact sheet.

Following his remarks, Trump also signed an order to close a trade loophole used to ship low-value packages — those valued at $800 or less — duty-free from China, known as “de minimis”.

The order covers goods from China and Hong Kong and will take effect on May 2, according to the White House, which said the move was intended to curb the flow of fentanyl into the US.

Chinese chemical makers are the top suppliers of raw materials purchased by Mexico’s cartels to produce the deadly drug, US anti-narcotics officials say.

A Reuters investigation last year showed how traffickers often route these chemicals through the United States by exploiting the de minimis rule. China has repeatedly denied culpability.

Trump is also planning other tariffs targeting semiconductors, pharmaceuticals, and potentially critical minerals, the official said.

Trump’s barrage of penalties has rattled financial markets and businesses that have relied on trading arrangements that have been in place since the middle of last century.

Earlier in the day, the administration said a separate set of tariffs on auto imports that Trump announced last week will take effect starting on Thursday.

Trump previously imposed 25pc duties on steel and aluminum and extended them to nearly $150 billion worth of downstream products.

Tariff concerns have already slowed manufacturing activity across the globe, while also spurring sales of autos and other imported products as consumers rush to make purchases before prices rise.

European leaders reacted with dismay, saying a trade war would hurt consumers and benefit neither side.

“We will do everything we can to work towards an agreement with the United States, with the goal of avoiding a trade war that would inevitably weaken the West in favor of other global players,” Italy’s prime minister, Giorgia Meloni, said.

US Representative Gregory Meeks, the top Democrat on the House Foreign Affairs Committee, said he would introduce legislation to end the tariffs. Such a bill has little chance of passing the Republican-controlled Congress, however.

“Trump just hit Americans with the largest regressive tax hike in modern history — massive tariffs on all imports. His reckless policies are not only crashing markets, they will disproportionately hurt working families,” Meeks said.

China urges US to immediately lift tariffs, vows retaliation

China urged the US to immediately cancel its latest tariffs and vowed countermeasures to safeguard its own interests.

The US move disregards the balance of interests reached in multilateral trade negotiations over the years and the fact that it has long benefited greatly from international trade, the Chinese Commerce Ministry said in a statement.

“China firmly opposes this and will take countermeasures to safeguard its own rights and interests,” the ministry said, as the world’s largest economies look set to spiral deeper into a trade war that stands to upend global supply chains.

Trump on Wednesday announced China would be hit with a 34pc tariff, on top of the 20pc he previously imposed earlier this year, bringing the total new levies to 54pc and close to the 60pc figure he had threatened while on the campaign trail.

Chinese exporters, as with those from every other economy, will face a 10pc baseline tariff, as part of the new 34pc levy, on almost all goods shipped to the world’s largest consumer economy from Saturday before the remaining, higher “reciprocal tariffs” take effect from April 9.

The 2020 “Phase 1” US-China trade agreement had required China to increase purchases of US exports by $200bn over a two-year period, but Beijing failed to meet its targets when the Covid-19 pandemic struck.

China bought $153bn in US goods in 2017, before the trade war began, Chinese customs data shows, and that figure rose to $164bn last year.

“China+1” strategies caught on among Chinese exporters and multinational companies that had made the production powerhouse central to their supply chains during Trump’s first term.

Trump’s tariffs could encourage China to step up its trade with alternative markets, but no other country currently comes even close to US consumption power, where Chinese producers sell more than $400 billion worth of goods annually.

“Trump’s tariffs certainly won’t help Chinese firms and will cause some real pain in some sectors, but they don’t make any definitive mark on the Chinese economy,” said William Hurst, Chong Hua Professor of Chinese Development at the University of Cambridge.

“US exports are of declining importance to China. The American tariffs will spur more Chinese trade with other places, from Europe to Southeast Asia and Africa,” he added.

But Chinese producers have described shifting to alternative markets as a “rat race”, resulting in price wars among exporters that risk fanning deflationary forces in the world’s second-largest economy as firms continue to squeeze shrinking margins.

“Trump and Xi are locked in a paradox of pressure and pride,” said Craig Singleton, senior fellow at Washington-based research institute Foundation for Defence of Democracies.

“Trump’s strategy mixes maximum pressure with sudden diplomatic overtures — he sees leverage and engagement as complementary. Xi, by contrast, is methodical and risk-averse, relying on delay and discipline. But here’s the dilemma: if he refuses to engage, the pressure escalates; if he engages too soon, he risks looking weak,” he added.

“Neither wants to be seen as folding first, but delay could deepen the standoff.”

Australia says US tariffs ‘not act of a friend’ but rules out reciprocal move

Australian Prime Minister Anthony Albanese said Trump’s decision to impose a 10pc tariff on its ally was “not the act of a friend”, but ruled out reciprocal tariffs against the US.

In comments outside the White House, Trump singled out Australian beef, which saw a surge in exports to the United States last year, reaching A$4 billion amid a slump in US beef production.

“They won’t take any of our beef. They don’t want it because they don’t want it to affect their farmers and you know, I don’t blame them but we’re doing the same thing right now,” Trump said.

Australia banned US fresh beef products in 2003 due to the detection of bovine spongiform encephalopathy (BSE), otherwise known as mad cow disease, in US cattle. BSE poses a risk to human health and has never been detected in cattle in Australia.

Albanese said Trump had not banned Australia beef, but had imposed a 10pc duty on all Australian goods entering the US, equivalent to the US baseline tariff on all imports, despite US goods entering Australia tariff-free.

“The (Trump) administration’s tariffs have no basis in logic and they go against the basis of our two nations’ partnership. This is not the act of a friend,” Albanese told reporters.

Australia would not impose reciprocal tariffs as this would increase prices for Australian households, he added. “We will not join a race to the bottom that leads to higher prices and slower growth,” Albanese said.

Australian shares dropped 0.9pc and the local dollar AUD=D3, a proxy for global risk sentiment, fell 0.5pc to $0.6269. Australian officials said countries in the Indo-Pacific region were among the hardest hit by the US tariffs, with Albanese suggesting this could advantage China.

Australia would seek to negotiate with the US to remove the tariffs without resorting to a dispute resolution mechanism in the two countries’ Free Trade Agreement, he said.

Negotiations to avoid a tariff stalled over beef as Australia insisted on US meat imports meeting its biosecurity standards, Albanese said.

Amid the campaign for parliamentary elections set for May 3, opposition Liberal Party leader Peter Dutton criticised Albanese for not winning a tariff exemption, and said Australia should leverage its critical minerals deposits and defence alliance to quickly strike a deal with Trump.

“This is a bad day for our country,” Dutton said.

No new tariffs for Canada, Mexico

Canada and Mexico, the two largest US trading partners, already face 25pc tariffs on many goods and will not face additional levies from today’s announcement.

Trump is not imposing his new 10pc global tariff rate on Canada and Mexico while his previous order remains in place for up to 25pc tariffs on many goods from the two countries over border control and fentanyl trafficking issues, the White House said in a fact sheet.

“[Trump] has preserved a number of important elements of our relationship, the commercial relationship between Canada and the United States. But the fentanyl tariffs still remain in place, as do the tariffs for steel and aluminum,” noted Canadian Prime Minister Mark Carney.

“We are going to fight these tariffs with counter-measures, we are going to protect our workers, and we are going to build the strongest economy in the G7,” Carney vowed.

Mexico’s President Claudia Sheinbaum said Mexico would not pursue a “tit-for-tat on tariffs” but would rather announce a “comprehensive programme” today.

US slaps 26pc tariff on India — lower than Asian peers

The US slapped a 26pc tariff on imports from India in a setback to the country’s expectation of getting relief from Trump’s global trade policy that has unnerved world markets for weeks.

A 10pc baseline tariff starts on Saturday before the higher reciprocal tariff takes effect from April 9. The tariff on India is nearly half of that on China and significantly less than that on Vietnam.

“They (India) are charging us 52pc and we charge almost nothing for years and years and decades,” Trump said at the White House. The relatively lower tariffs imposed on India calmed equity markets.

India imposed “uniquely burdensome” non-tariff barriers, the removal of which will increase US exports by at least $5.3bn annually, the White House said.

The tariffs would remain in effect until Trump determined that the “threat posed by the trade deficit and underlying non-reciprocal treatment is satisfied, resolved, or mitigated,” the statement added. The US has a trade deficit of $46bn with India.

Last week, Reuters reported that New Delhi is open to cutting tariffs on US imports worth $23bn to mitigate the impact on its exports in sectors like gems and jewellery, pharmaceuticals and auto parts.

The Trump administration, however, exempted pharmaceutical exports from the tariff, bringing cheer to India’s pharma industry. The US accounted for nearly a third of India’s pharmaceutical exports — mainly cheaper versions of popular drugs — with sales of about $9bn last fiscal year.

Asian healthcare stocks surged today, led by Indian generic drugmakers, defying the drop in the broader market after Trump’s wide-ranging reciprocal tariffs.

Indian pharma companies, which rely on the US for a major portion of their revenue, “can breathe easy for now”, Jefferies’ analysts said, but cautioned that tariffs at a later date could not be ruled out.

Indian equity markets are better placed than their Asian counterparts to ride out the impact of the sweeping tariffs, according to strategists at JP Morgan Private Bank and Morgan Stanley.

More to follow