Trump prepares to unveil reciprocal tariffs as markets brace amid trade war fears

As Donald Trump prepared to unveil a swathe of reciprocal tariffs, global markets braced and some Republican senators voiced their opposition to a strategy that critics warn risks a global trade war, provoking retaliation by major trading partners such as China, Canada and the European Union.

The US president said on Monday he would be “very kind” to trading partners when he unveils further tariffs this week, potentially as early as Tuesday night.

The Republican billionaire insists that reciprocal action is needed because the world’s biggest economy has been “ripped off by every country in the world”, promising “Liberation Day” for the US.

He could also unveil more sector-specific levies.

Asked for details, he told reporters on Monday: “You’re going to see in two days, which is maybe tomorrow night or probably Wednesday.”

But he added: “We’re going to be very nice, relatively speaking, we’re going to be very kind.”

Some Republican senators spoke out against Trump’s tariffs on Canada and are considering signing on their support for a resolution blocking them, CNN reported. Senator Susan Collins warned that tariffs on Canada would be particularly harmful to Maine and that she intended to vote for a resolution aimed at blocking tariffs against Canadian goods.

Republican Senator Thom Tillis also said he was considering backing the resolution, adding: “We need to fight battles with our foes first and then try to figure out any inequalities with our friends second.”

Already, China, South Korea and Japan agreed on Sunday to strengthen free trade between themselves, ahead of Trump’s expected tariff announcement.

But Trump said on Monday he was not worried that his action would push allies toward Beijing, adding that a deal on TikTok could also be tied to China tariffs.

White House press secretary Karoline Leavitt told reporters that the goal on Wednesday would be to announce “country-based tariffs”, although Trump remained committed to imposing separate sector-specific charges.

The uncertainty has jolted markets, with key European and Asian indexes closing lower, although the Dow and broad-based S&P 500 eked out gains.

Market nervousness intensified after Trump said on Sunday his tariffs would include “all countries”.

The Wall Street Journal reported on Sunday that advisers have considered imposing global tariffs of up to 20%, to hit almost all US trading partners. Trump has remained vague, saying his tariffs would be “far more generous” than ones already levied against US products.

Trump’s fixation on tariffs is fanning US recession fears. Goldman Sachs analysts raised their 12-month recession probability from 20% to 35%.

This reflects a “lower growth forecast, falling confidence and statements from White House officials indicating willingness to tolerate economic pain”. Goldman Sachs also lifted its forecast for underlying inflation at the end of 2025.

China and Canada have imposed counter-tariffs on US goods, while the EU unveiled its own measures to start mid-April. Other countermeasures could come after Wednesday.

For now, the IMF chief, Kristalina Georgieva, said at a Reuters event on Monday that US tariffs were causing anxiety, although their global economic impact should not be dramatic.

Ryan Sweet of Oxford Economics said to “expect the unexpected”, anticipating that Trump would “take aim at some of the largest offenders”.

Besides reciprocal country tariffs, Trump could unveil additional sector-specific levies on the likes of pharmaceuticals and semiconductors. He earlier announced car tariffs to take effect on Thursday.

Economists have expected the upcoming salvo could target the 15% of partners that have persistent trade imbalances with the US, a group that the US treasury secretary, Scott Bessent, has dubbed a “Dirty 15”.

The US has some of its biggest goods deficits with China, the EU, Mexico, Vietnam, Taiwan, Japan, South Korea, Canada and India.

US trade partners are rushing to minimise their exposure, with reports suggesting India may lower some duties.

The European Central Bank president, Christine Lagarde, said on Monday that Europe should move towards economic independence, telling France Inter radio that Europe faces an “existential moment”.

Separately, the British prime minister, Keir Starmer, spoke with Trump on “productive negotiations” towards a UK-US trade deal, while the German chancellor, Olaf Scholz, said the EU would respond firmly to Trump but was open to compromise.

It was “entirely possible” for fresh tariffs to be swiftly reduced or put on hold, said Greta Peisch, a partner at law firm Wiley Rein.

In February, Washington paused steep levies on Mexican and Canadian imports for a month as the North American neighbours pursued negotiations.

With Agence France-Presse