Australian stocks suffered substantial losses this morning, shedding $35 billion in value as international markets reacted to sweeping tariffs imposed by US President Donald Trump. The S&P/ASX 200 Index plummeted by 1.4 per cent, falling 108.6 points to settle at 7751.1 points during the early trading session. Most sectors experienced significant declines, with the energy industry most severely affected—suffering a nearly 6 per cent drop amid fears of increasing oil supplies.
Trump’s recent tariffs on American imports have sent shockwaves through global economies, sparking threats of retaliation and prompting urgent discussions among industries as markets around the world sank. While Australian exports to the US are now subjected to a 10 per cent tariff—relatively lower than tariffs facing other nations and trading blocs—the impact is diluted as only 4 per cent of exported goods from Australia are directed to the US.
In stark contrast, the tariffs on China are notably harsher: a 34 per cent levy added to a previous 20 per cent tariff, with similar high rates applied to the EU, Japan, and South Korea. Given that China is Australia’s largest trading partner, a reduction in demand from there poses a significant risk to Australian exporters.
The immediate impacts on global markets were severe, with the US Standard & Poor’s 500 index dropping by 3.7 per cent and Europe’s STOXX 600 falling by 2.7 per cent. Losses were also recorded in Asia, as Tokyo’s benchmark index slid 2.8 per cent and oil prices tumbled more than $2 a barrel.
The global trading landscape now teeters on the brink of an all-out trade war, with countries such as China, the EU, South Korea, Mexico, and India indicating they would impose retaliatory measures against US goods. Analysts are grappling with the implications of this drastic policy shift that disrupts the established global trading framework, undermining decades of efforts to reduce tariffs through negotiations and free trade agreements. Stephen Innes from SPI Asset Management described the extensive rollout of tariffs as a “full-throttle macro disruption,” while Deutsche Bank analyst Jim Reid referred to it as a “radical policy reordering.”
The current tariff strategy has led to an average tariff rate for the US of between 25 and 30 per cent, the highest level seen since the early 20th century, suggesting a momentous shift in trade policy that could have long-lasting repercussions on economies worldwide.