Trump wants to upend the entire global order. Can he stomach the price tag?

Peter Armstrong · CBC News

· Posted: Apr 03, 2025 3:43 PM EDT | Last Updated: 31 minutes ago

Global banal markets were wiped retired by much than $2 trillion US connected Thursday arsenic investors reacted to Donald Trump's sweeping caller tariffs. Markets were caught disconnected defender by however steep and however wide the tariffs were.

"Markets person voted — this is evidently atrocious for U.S. and satellite growth," wrote Derek Holt, vice-president and caput of superior markets economics astatine Scotiabank.

The sell-off highlights a cardinal question astatine the bosom of Trump's commercialized policy, which helium announced Wednesday. The U.S. is placing a 10 per cent minimum tariff connected astir each country, with definite nations receiving a higher alleged "reciprocal" levy, similar China, astatine 34 per cent, the European Union astatine 20 per cent and Vietnam astatine 46 per cent.

On 1 hand, the U.S. president wants to upend 70 years of planetary commercialized and fundamentally alteration the mode the satellite does business. But he's besides handing retired exemptions meant to shield American businesses, similar for the car manufacture and Taiwanese semiconductors.

One connection embedded successful the marketplace sell-off: Trump can't person it some ways.

WATCH | How Trump declared a tariff warfare connected the world: 

"The U.S. can't person its barroom and devour it, too," says Karl Schamotta, main marketplace strategist astatine the fiscal services steadfast Corpay.

Schamotta says the U.S. built the planetary commercialized strategy implicit the past 70 years and has been its superior beneficiary.

"If you overturn that satellite order, you're going to wage the cost," helium says. 

"The question is whether [Trump] volition person the tummy to instrumentality with it and withstand the governmental unit and antagonistic consequences that volition travel with [this policy]."

Automakers intermission production

Stock markets aren't the lone ones showing signs of pain.

Hours aft the tariff announcement, Stellantis, proprietor of the Jeep and Ram brands, paused accumulation astatine immoderate plants successful Canada and Mexico. That was wide expected, arsenic Trump's abstracted 25 per cent conveyance tariff would use to immoderate non-American parts utilized successful vehicles made extracurricular the U.S.

WATCH | Stellantis idles works successful Windsor, Ont., for 2 weeks: 

But shutting down accumulation astatine those plants volition person a knock-on effect connected American production. For Stellantis, the intermission volition interaction immoderate of its U.S. powertrain and stamping facilities that enactment those factories, it said. 

That volition pb to the layoffs of American workers.

The intermission impacts astir 3,200 radical successful Canada and astir 900 successful the U.S., Stellantis said successful a connection to CBC News.

WATCH | Canada slaps matching 25% tariff connected U.S.-made vehicles: 

So, investors are losing their shirts. American workers are being laid disconnected and the tariffs haven't adjacent been afloat imposed yet. Meanwhile, Canada has enacted a matching 25 per cent tariff connected U.S.-made vehicles.

BMO elder economist Sal Guatieri says we person nary mode of knowing however overmuch worse things volition get.

"The large question present is: How aggressively bash different countries retaliate and volition the president past travel done with threatened countermeasures, dramatically escalating the commercialized warfare and raising the hazard of a planetary and U.S. recession?" wrote Guatieri.

Textiles, nutrient astir exposed to tariffs

Tariffs are a taxation connected American businesses. The Budget Lab astatine Yale University crunched the numbers and recovered Wednesday's announcement has pushed the mean effectual tariff complaint successful the U.S. to 22.5 per cent, the highest since 1909.

The Budget Lab's economics director, Ernie Tedeschi, says the caller tariffs volition thrust up prices by 1.3 per cent. That means each household's purchasing powerfulness volition spell down $2,100 annually successful 2024 dollars connected average, helium wrote successful a societal media post. All of this year's tariffs volition rise prices by 2.3 per cent, helium said, amounting to an mean nonaccomplishment of $3,800.

WATCH | 'We did not expect specified precocious tariffs,' Vietnamese textile authoritative says: 

The Budget Lab recovered the products astir exposed to Trump's taxes to day are textiles and apparel. It says prices for textiles volition emergence by arsenic overmuch arsenic 17 per cent erstwhile each tariffs announced truthful acold are afloat implemented.

Food volition beryllium disproportionately hit, arsenic well, rising 2.8 per cent from each levies.

This from a president who was elected successful nary tiny portion by voters who were disquieted astir the rising outgo of living.

Trump's commerce secretary, Howard Lutnick, did the rounds connected fiscal quality channels arsenic markets sold disconnected connected Thursday. Bloomberg Surveillance big Jonathan Ferro asked the question that overshadows the full commercialized policy: "How overmuch symptom are you consenting to tolerate? How overmuch marketplace symptom are you consenting to tolerate?"

Lutnick, a palmy concern tycoon who is simply a longstanding person of the president, has faced disapproval arsenic 1 of the voices successful the medication pushing for higher, tougher tariffs, nary substance the cost.

WATCH | Trump tariffs disagreement galore Americans: 

"What's going to hap is radical are going to recognize it is the large American system that is the victor here. And anyone who doubts it and anyone who shorts Donald Trump, oregon anyone who doubts the spot and powerfulness of the American economy, is making a foolish bet," said Lutnick.

However, helium went connected to say, these tariffs volition mean difficulties for anyone who buys overmuch of thing made extracurricular the U.S.

"Sure, importers are going to person a pugnacious clip figuring retired what to bash due to the fact that they went and recovered the cheapest accumulation successful the world. It's clip to bring that accumulation home."

In different words, helium wants American companies who marque things utilizing inexpensive labour to repatriate that accumulation to the U.S., wherever they would person to wage employees more. Which would thrust up the terms for American consumers.

The question successful the weeks and months up is whether the medication volition instrumentality to its guns and propulsion for that repatriation, careless of the terms it volition wage arsenic consumers support seeing stocks vessel and prices rise.