On Thursday evening, towards the end of a long week at a textiles factory on the outskirts of Ho Chi Minh City, Nguyēn Thị Diẹu and her husband were watching the news. More than 8,700 miles away, US president Donald Trump was announcing sweeping, unprecedented tariffs on every country around the world. Nowhere was safe, even the uninhabited Heard Island and McDonald Islands off the western coast of Australia that, for some unexplained reason, were hit with a 10% tariff.
His announcement launched a fierce global trade war and triggered a global market meltdown, including on Trump’s own cherished Wall Street, where hundreds of billions of dollars of stock values evaporated.
And for Diẹu and her husband, it could mean they lose their jobs. They both work for a Taiwanese company making footwear in Vietnam for an American company, that exports them around the world. It is hard to find a better example of modern globalisation – and now, as the US enters a new age of protectionism, a speech in the White House Rose Garden means that Diẹu doesn’t know how her family will survive.
“Nothing is clear,” said Diẹu on Saturday night, as she browsed a roadside market in one of Ho Chi Minh City’s industrial zones, home to tens of thousands of people who work in the city’s factories. “I feel confused and worried that my job may not be stable.”
Officials in Vietnam are concerned. The US is Vietnam’s biggest market, with exports making up 30% of the country’s GDP and fuelling its economic growth. Hours after the announcement, Vietnam’s prime minister ordered the creation of a “rapid response team” and said the deputy prime minister, Ho Duc Phoc, would head to the US for a “working visit”.
Every country around the world has had a similar reaction. In Europe, leaders condemned Trump’s tariffs as “fundamentally wrong” (Olaf Scholz), “brutal and unfounded” (Emmanuel Macron) and “contrary to the interests of millions of people, on both sides of the Atlantic” (Pedro Sánchez).
European media were similarly brutal. “Filled with paranoia, vengeance and coerciveness” was the verdict of Le Monde, while Italy’s Corriere della Sera urged the EU to threaten “counter-tariffs … to bring the US to the table. Clearly, the EU is being put through what amounts to a stress test. It will need to demonstrate unity.”
But while Ursula von der Leyen, the European Commission chief, said Europeans felt “let down by their oldest ally” and warned the tariffs were “a major blow to the world economy” with “dire consequences”, the EU did not immediately respond.
Partly, that is because – in the words of Mujtaba Rahman of the Eurasia group consultancy – the bloc’s “ultimate aim is to prevent a further escalation, bring the US to the table, and explore paths to mutually rolling back transatlantic trade barriers”.
Brussels still hopes that over the coming weeks, “a combination of counter-duties, threats and offers” will bring results, Rahman said, limiting the damage to an EU-US trade relationship that was worth more than €1.6tn (£1.3tn) in 2023.
There is a lot for Europe to lose if it doesn’t. Trump’s “liberation day” tariff of 20% on almost all EU exports to the US came after 25% levies on steel, aluminium, cars and car parts. In total, about 70% – or €380bn – of EU exports to the US will be affected.
EU officials calculate that would raise about €80bn for the US treasury if trade remained unchanged, which it most probably won’t: economists have estimated that in the medium term, EU exports to the US could fall by 50% because of the tariffs.
But if Brussels hopes a staggered approach to retaliation will encourage the US to negotiate, there is another reason it is not rushing to respond: getting 27 member states, each with national interests to defend, to agree on a single strategy is not easy.
The EU’s response to Trump’s steel and aluminium tariffs, which were announced six weeks ago, will probably include levies on emblematic American products such as orange juice, blue jeans, bourbon whiskey and Harley-Davidson motorcycles.
Due to be unveiled in mid-April, however, its exact details have still not been decided. Still less, the bloc’s retaliatory response to the 25% duties on EU cars and car parts that came into force on 3 April – let alone the latest liberation day tariffs.
Member states are nervous. France, Italy and Ireland, for example, are campaigning hard to have bourbon removed from the list – because Trump has threatened to hit European wines and spirits with a 200% duty if the EU includes it.
Targeting the US whiskey, they argue, would do more economic harm than good: EU countries import barely €500m of bourbon annually, but export €8bn of wine and spirits to the US – and some EU winemakers rely on the US for up to 20% of sales.
“What matters,” said Ignacio García Bercero, a former senior EU trade negotiator, “is that you maximise the political impact [on the US], and limit the economic impact [to the EU]”. It is a delicate balancing act.
The EU does, however, have one strong hand to play in services. Trump is obsessed with the $236bn US trade deficit with the EU in goods, but less well known is that the US runs a trade surplus in services with the EU of €109bn.
If necessary, limiting US companies’ access to EU public procurement tenders or to European markets ranging from banking and other financial services to big tech could prove a powerful riposte. For the time being, though, it has not come to that.
“We are buying the space we need to negotiate, and looking at targeting our response in the most effective way possible,” an EU official said: not just “how we impact the US”, but also “saving our member states and our industry the pain wherever possible”.
As Europe reeled from the shock of the tariffs, the unspoken message from Beijing was: welcome to our world. “There are no winners in trade wars, and there is no way out for protectionism,” the commerce ministry said on Thursday.
For Xi Jinping’s government, there was no Brussels-style hesitancy – they immediately hit back. On Friday, China announced that it would be imposing retaliatory tariffs of 34% on US imports, starting on 10 April. China also added US entities to its export control list, restricting their ability to do business in China.
Chinese companies have been figuring out how to circumnavigate Trump’s tariffs since 2018, when Trump’s first US-China trade war started. Companies have been moving their supply chains to south-east Asia, while the government has been signing trade deals with global south countries with increasing gusto.
Even with countries without a free trade agreement, such as Brazil, Chinese bilateral trade has soared in the past seven years. In 2023, China-Brazil trade reached a record $157.5bn.
Economists noted that the US tariffs on Chinese goods did not change the fact that the US is a net importer of products that China produces, such as fast fashion, electronics and clean energy equipment. “If the US shifts around its importing pattern without changing its net imports, it’s not going to make much of a difference to the world,” said Michael Pettis, a professor of finance at Peking University. “You’ll see trade shift around, but the basic imbalances will remain there.”
Trump and his team have tried to tackle this problem by imposing tariffs on the countries that have been used by Chinese companies to reroute their supply chains, such as Vietnam, Thailand and Cambodia. Those countries are being hit with even higher tariffs than China, at 46%, 36% and 49%, respectively.
Whether or not the tariffs have the desired effect from the US perspective, there is one clear strategic victory – for China. China, once again, can present itself as the stable global partner for third countries, in contrast to the capricious US.
Back in Washington, Trump was claiming on social media that “China played it wrong – they panicked”, insisting that despite the market drops, global political condemnation and even rare criticism from his own Republican party, his tariffs had made it a “great time to get rich”.
But with all eyes nervously on Monday’s markets amid worries that the calamitous drops will continue, recession fears are mounting in America. JP Morgan analysts last week boosted their odds on a global recession to 60% and Americans are bracing for a return of inflation – the thing that above all else probably doomed Trump’s predecessor, Joe Biden.
On the streets of New York too, there was panic among some. In Washington Square Park, two sisters from Detroit were sitting on a park bench nearby the magnolia trees now in bloom. Kathleen, a primary school teacher, said she worried about whether there was a plan in place before changes are made.
“I want to be optimistic, but I live under an umbrella of worry with this administration,” Kathleen said. “I worry about the leadership, worry about a lack of continuity within the leadership, and so many changes at once without a plan.”
Her sister, Elizabeth, said she’d grown so anxious she’d stepped back from the news. “Our mum definitely had a huge jump in anxiety during this past week over her investments. She worked hard for those and she lives on them … a retired schoolteacher, and the drop in stocks very much affects her day-to-day feeling of security.”
Trump made his move because he dreams of a return of American manufacturing might, convinced that tariffs will force factories home to the US, even though almost all economists think that is highly unlikely.
Yet, for such a momentous decision which has rattled the entire world economy, Trump reportedly only made up his mind at the last minute. According to the Washington Post, Trump didn’t arrive on an exact plan until just three hours before the Rose Garden performance.
The “liberation day” announcement from the White House was a choreographed event, and his speech drew cheers from the audience, largely made up cabinet members and blue-collar workers from manufacturing sectors that have for decades been economically pummelled by foreign competition. He offered up a vision that tariffs would bring back an older American economy, reopening factories and returning prosperity to ordinary workers.
“Taxpayers have been ripped off for more than 50 years,” Trump complained “But it is not going to happen any more.”
Vice-president JD Vance said: “We’ve seen closing factories, we’ve seen rising inflation. We’ve seen the cost of housing so high that most Americans can’t afford to buy a home right now. President Trump is taking this economy in a different direction.”
Most observers would probably agree that the US economy was heading in a “different direction”, but would not be quite as enthusiastic as the vice-president.
On Friday, Jerome Powell, the chair of the Federal Reserve, warned that Trump risked stoking even higher inflation and slower growth. “It is now becoming clear that the tariff increases will be significantly larger than expected,” he said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
As the financial markets continued to convulse on Friday, the Washington Post reported that Trump was unbowed by negative headlines, criticism from foreign leaders, and was determined to listen to a single voice to secure what he views as his political legacy. That voice was his own.
“He’s at the peak of just not giving a fuck any more,” a White House official with knowledge of Trump’s thinking told the newspaper. “Bad news stories? Doesn’t give a fuck. He’s going to do what he’s going to do. He’s going to do what he promised to do on the campaign trail.”
But even some former Trump economic officials privately expressed doubts that returning the US to an era of manufacturing self-sufficiency was probably impossible.
The author Michael Wolff, who has published four books about Trump in power, says the US president will now be keenly gauging how his interruption to global trade norms is going down, with updates and live-action replays provided by aides. Trump, Wolff says, is probably caught between two opposing instincts.
“It’s great for him – he’s dominating the news once again. Nobody is talking about anything else except tariffs. Suddenly, tariffs, an arcane piece of trade policy, are the most dramatic thing in the world that he’s imbued with reality-show stuff. He’ll be really pleased with that.”
But on the other hand, Wolff predicts, Trump will be watching the financial markets. “He’ll have the business guys calling up saying: what the fuck are you doing? I’m sure he hasn’t come to any conclusion. So on the one hand it’s great – he’s the world’s leading guy again. On the other, it might collapse in on him.”
And that, he adds, is the essence of Trump. “He’s fundamentally self-destructive, but that self-destructive impulse is exactly what keeps him at the forefront of the news.”
Back in Vietnam, Trump’s image as a successful businessman chimed with many in the country, where entrepreneurship is prized. Several of his books have been translated into Vietnamese, including The Art of the Deal. During his first term, many Vietnamese also welcomed his tough stance on China, and polling suggests Vietnam was one of the few countries where most of the population was confident in his leadership.
“I view him all the time on TV,” said Diẹu, who adds that she also likes him. Will her mind change after his tariff announcement? There’s a pause. “It’s hard to say.”
