President Trump announced that the US will apply a universal tariff of 10% as of April 5 and reciprocal tariffs from 20% to over 50% on all trading partners, effective from April 9.

Difficult negotiations

Trump’s new tariff policy has shaken global financial markets since last Wednesday. Stock markets around the world, including in the US, have recorded their sharpest declines in years, erasing over 10 trillion USD of market capitalization as investors fear a large-scale global trade conflict. Many international financial institutions have warned of the risk of a global economic recession probably within this year.

Many countries have expressed their willingness to negotiate with the US and sign new trade agreements. US Trade Representative Jamieson Greer said Tuesday that some 70 countries and territories have proposed to engage in negotiations with the US over the tariffs issue. President Trump said he is willing to negotiate, but insisted that the new tariffs will not be suspended.

Negotiation with the US has been top choice for many countries and alliances. The Japanese government has announced plans to start minister-level talks with the US this week, and Prime Minister Shigeru Ishiba said he is ready to travel to the US to meet with President Trump. South Korea’s Minister of Trade, Cheong In Kyo, departed for Washington on Tuesday for talks with his US counterpart. In Southeast Asia, where most countries have been hit with high new tariffs, several leaders say they are ready to negotiate. Malaysian Prime Minister Ibrahim Anwar, whose country is currently the ASEAN Chair, said ASEAN will unite in dialogue with the US. “We do not believe in megaphone diplomacy,” Anwar said. “As part of our soft diplomacy of quiet engagement, we will be dispatching together with our colleagues in ASEAN our officials in Washington to begin the process of dialogue.”

Analysts say the upcoming negotiations will not be easy because Trump’s goals are to reduce trade deficits and bring manufacturing back to the US, which are difficult long-term tasks. Every country will need to prepare a negotiation strategy and contingency plans.

High risks remain

Despite many imminent negotiations with the US, the risk of a global trade conflict remains high, fueled by escalating tensions between the US and China.

In retaliation to the US’s 54% tariff on Chinese goods, on April 4 China announced a 34% tariff on all US exports to China. In response, President Donald Trump declared an additional 50% tariff on Chinese goods. China responded that if the US insists on this path, China will fight to the end.

Rintaro Nishimura of the Asia Strategic Consultant Group said the current tension between the world’s two largest economies resembles the tension in President Trump’s first tenure (2016–2020), which negatively impacted global trade. "In the case of China, President Trump and President Xi might sit down to discuss and resolve the issue. But at this point, that seems unlikely to happen," Nishimura said.

While concerned about a global trade conflict and a medium-term risk of recession, observers are also questioning Trump’s ultimate objectives. Arancha González Laya, Dean of the Paris School of International Affairs at Sciences Po, noted that the strong reaction from global markets in recent days shows that the US tariff policy is negatively affecting post-World War II financial and monetary systems, also known as the Bretton Woods system, in which the US has long played a central role. “It’s important to make sure we listen carefully to what the rest of the world wants, because today, the rest of the world plays a significant role and must be taken into account. From an economic, financial, or trade perspective, the US is clearly important, but it is not the only player on the global stage,” said Laya.

Similar warnings have also been made by economists and leaders of major US corporations, who believe the new tariff policy not only jeopardizes US economic growth but also threatens to erode global partners’ confidence in the US.