Markets

New tariffs would make the US one of the most protectionist countries in the world

Key Points
  • U.S. tariffs, already higher than those of most advanced economies, would surge to levels higher than those of many emerging-market countries if the new tariffs are put in place, according to Deutsche Bank.
  • Trump tweets Sunday that the current 10% tariffs on $200 billion worth of Chinese goods will rise to 25% on Friday. He also threatens to impose 25% levies on an additional $325 billion of Chinese goods "shortly."
President Donald Trump delivers remarks during a National Day of Prayer service in the Rose Garden at the White House May 02, 2019 in Washington, DC.
Chip Somodevilla | Getty Images

The U.S. could become one of the most protectionist countries in the world, if President Donald Trump's latest tariff threat materializes.

Trump tweeted Sunday that the current 10% tariffs on $200 billion worth of Chinese goods will rise to 25% on Friday. He also threatened to impose 25% levies on an additional $325 billion of Chinese goods "shortly." U.S. duties, already higher than those of most developed economies, would surge to levels above those of many emerging-market countries, where tariffs are more commonplace, CNBC's Steve Liesman pointed out.

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"If the U.S. follows through on the latest trade war threats it will raise the overall US tariff level to 7.5%, which is higher than in many emerging markets," Torsten Slok, Deutsche Bank's chief economist, said in an email on Monday.

The markets have not anticipated a stalemate between China and the US, says expert
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The markets have not anticipated a stalemate between China and the US, says expert

Trump's tariff plan rattled the markets, which had just recently hit record highs on trade-deal optimism and solid corporate earnings. Companies with high revenue exposure in China such as semiconductors led the losses on Monday.

Some Wall Street analysts remain positive a trade deal will come through, saying the threat from Trump is just a negotiation tactic.

Trade negotiations between Washington and Beijing officials are still set to resume on Wednesday, but Chinese Vice Premier Liu He will likely cancel the trip he'd planned for the final round of talks.