The latest round of sweeping US tariffs announced by President Donald Trump has triggered widespread concern over their potential impact on global trade, economic growth, and financial markets. With tariffs now covering 185 countries, economists warn of recession risks and disruptions to international commerce.

The new tariffs come at a time when the world economy is still grappling with post-pandemic inflation, record debt levels, and geopolitical tensions. 

Global Economy Faces More Pressure

According to Fitch Ratings, the US tariff rate on all imports has jumped to 22%, a level not seen since the early 20th century. 

According to a report from Reuters, the measures impose a baseline 10% tariff on all imports, with significantly higher rates on key trading partners—China faces a 34% tariff, while the European Union is hit with a 20% levy. The automobile sector has also been targeted, with a 25% tariff on auto and auto parts.

Economists fear these tariffs will lead to price increases and lower consumer demand, potentially pushing the global economy toward a downturn. 

Financial markets reacted sharply to the announcement. The S&P 500 saw a rapid selloff, erasing $2 trillion in market capitalization within 15 minutes, according to The Kobeissi Letter. Nasdaq 100 futures plummeted by 900 points, a stark reversal from earlier gains. Technology stocks, which rely heavily on global supply chains, were particularly affected.‍

Crypto Market Sees Volatility

Initially, the cryptocurrency market saw a brief surge as traders speculated on potential economic instability. Bitcoin (BTC) jumped to a session high of $88,500 but quickly reversed, falling 2.6% to around $82,876. Ether (ETH) saw a sharper decline, dropping over 6% from $1,934 to $1,797, according to CoinMarketCap. The total crypto market capitalization dropped 5.3% to $2.7 trillion.

Market sentiment took a hit, with the CMC’s Crypto Fear & Greed Index showing a score of 24, edging closer to "extreme fear" zone. However, some losses have since been recovered. 

At the time of writing, Bitcoin stands at $83,578.52, reflecting a 4.24% decline over the past week, while Ethereum is trading at $1,818.91, marking a 9.96% weekly drop, according to CoinMarketCap.‍

Trade War Concerns Grow

Experts warn that retaliatory tariffs from other nations could exacerbate economic instability. Japan and South Korea, both longtime US allies, have been hit particularly hard, facing tariffs of 24% and 25%, respectively. Japan’s trade minister has hinted that these measures may violate World Trade Organization (WTO) rules, though Tokyo has yet to announce concrete countermeasures.

Meanwhile, European Central Bank (ECB) President Christine Lagarde highlighted the broader geopolitical shift, noting that the world is moving away from an era of open, rules-based trade and into a period of increased economic fragmentation. "We must contend with closure, fragmentation, and uncertainty," she stated.

While Trump argues that these tariffs will boost domestic manufacturing and reduce the U.S. trade deficit, economists question whether businesses will invest in domestic production given ongoing labor shortages and high employment rates. Some analysts warn that the US could seek further measures, including currency interventions, to counteract trade imbalances.

For now, financial markets and businesses worldwide are bracing for further turbulence as they assess the full impact of the new tariffs.