Trump Set to Escalate Global Trade War With New Tariffs – Markets Brace for Impact

US President Donald Trump is expected to announce sweeping new global tariffs on Wednesday, intensifying a trade war that has rattled financial markets and cast uncertainty over the US economic outlook.

The White House confirmed Tuesday that Trump is finalizing the measures, dubbed the “Liberation Day” tariffs, which will be unveiled in a Rose Garden address.

“He's with his trade and tariff team right now, perfecting it to make sure this is a perfect deal for the American people and the American worker,” press secretary Karoline Leavitt told reporters.

She described April 2, 2025, as potentially “one of the most important days in modern American history,” claiming the tariffs will boost US industrial competitiveness and shrink trade deficits.

The move could have staggering financial implications. White House adviser Peter Navarro projected the tariffs could generate $6 trillion in revenue over a decade. However, economists warn that consumers will bear the brunt of higher costs, potentially making this the largest peacetime tax increase in US history.

While specifics remain undisclosed, *The Wall Street Journal* reports that Trump may impose a blanket 20% tariff on most imports, along with targeted sector-specific measures.

Previous tariffs—including 25% duties on steel, aluminum, and Chinese imports—have already strained trade relations. Temporary exemptions for Mexico and Canada are set to expire this week, further escalating tensions.

The European Union has warned of retaliation. “Europe did not start this confrontation,” said EU Commission President Ursula von der Leyen. “We do not necessarily want to retaliate, but we have a strong plan to if necessary.”

Meanwhile, China is reportedly seeking a coordinated response with Japan and South Korea, though no formal alliance has been confirmed.

Markets are bracing for turbulence. The S&P 500 and Nasdaq just posted their worst quarterly performances since 2022, and major financial institutions like Goldman Sachs and JPMorgan have raised recession risks due to tariff uncertainty.

Federal Reserve Chair Jerome Powell acknowledged that tariffs could cause temporary inflation spikes, complicating the central bank’s rate-cut plans.

While the Middle East has so far been spared direct tariffs, analysts warn that dollar-pegged Gulf economies could face tighter monetary conditions if the Fed maintains high interest rates. S&P Global notes this could stifle private investment and slow regional growth.

As the world awaits Trump’s announcement, the stakes are high—not just for trade, but for inflation, growth, and geopolitical stability. Whether these tariffs will “liberate” American industry or deepen economic strife remains the critical question.