White House: Reciprocal tariffs effective immediately after announcement

The White House confirmed on Tuesday that U.S. President Donald Trump will impose new tariffs on Wednesday, though it provided no details about the size and scope of trade barriers that have businesses, consumers and investors fretting about an intensifying global trade war.

White House spokesperson Karoline Leavitt said reciprocal tariffs on countries that impose duties on U.S. goods would take effect immediately after Trump announces them. The announcement is scheduled for 4 p.m. Eastern Time (2000 GMT). Meanwhile, a 25 percent tariff on auto imports will take effect on April 3.

Hard details of what Trump will unveil on Wednesday remained unclear. According to the Washington Post, aides are considering a plan that would raise duties on products by about 20 percent from nearly every country, rather than targeting certain countries or products. The administration anticipates the new duties could raise more than $6 trillion in revenue that could be sent on to Americans as a rebate, the paper reported.

Meanwhile, the Wall Street Journal, citing people familiar with knowledge of discussions, reported the U.S. trade representative is preparing the option for an across-the-board tariff on a subset of nations that likely would not be as high as a 20 percent universal tariff option.

Economists warn of recession risk

Economists warned that Trump's extensive focus on tariffs is eroding investor, consumer and business confidence in ways that could slow activity and drive up prices.

A raft of business and household surveys have shown sagging confidence in the economic outlook, citing worries that Trump's tariffs will lead to resurgent inflation.

Data from the global nonprofit think tank the Conference Board shows that the consumer sentiment in the U.S. registered the largest monthly drop in more than four years in February as consumers expected higher inflation risks. A 20 percent tariff on top of those already imposed would cost the average U.S. household at least $3,400, according to the Yale University Budget Lab.

"There's an initial, one-time increase in inflation at the price level because firms have to raise prices to offset the impact of tariffs," said Ryan Swift, chief bond strategist at BCA Research. "But over the medium term, tariffs would actually slow manufacturing activity, which means less demand ... and inflation will end up lower than what it would have been otherwise just because the economy is hurt. It reflects recession expectations."

Goldman Sachs, in its latest research note, has raised its 12-month recession probability to 35 percent from 20 percent, reflecting its lower growth forecast for the fourth quarter, declining consumer confidence and "statements from White House officials indicating willingness to tolerate economic pain."

Signs are already emerging that the U.S. economy is losing momentum due in part to uncertainty fostered by Trump's chaotic approach to economic policymaking. According to the Institute for Supply Management, U.S. manufacturing activity contracted after two straight months of growth, and goods producers reported their input costs were the highest in nearly three years. Tariffs were widely cited as the main source of anxiety for factory managers.

"Rising prices while business activity slows imply the economy could be heading into stagflation," said Jeffrey Roach, chief economist at LPL Financial.

Rattled investors have also sold stocks aggressively for more than a month, wiping nearly $5 trillion off the value of U.S. stocks since mid-February. Wall Street ended mixed on Tuesday with investors stuck in limbo awaiting details of Trump's announcement on Wednesday.

Other countries vow reaction

The risks are not just isolated to the U.S.

Factories around the world, from Japan to Britain to Canada, saw activity slump in March as businesses braced for Trump's new tariffs, though some saw a bounce in the race to get goods to consumers before the new measures hit.

Canada has vowed to respond with tariffs of its own. "We will not disadvantage Canadian producers and Canadian workers relative to American workers," Prime Minister Mark Carney said in Winnipeg.

Carney and Mexican President Claudia Sheinbaum spoke on Tuesday about Canada's plan to "fight unjustified trade actions" by the U.S., the prime minister's office said. "With challenging times ahead, Prime Minister Carney and President Sheinbaum emphasized the importance of safeguarding North American competitiveness while respecting the sovereignty of each nation," Carney's office said in a statement.

U.S. companies say a "Buy Canadian" movement is already making it harder for their products to reach that country's shelves.

Sheinbaum said on Tuesday that Mexico is prepared to respond to the tariffs on Mexican products. "Let them know that we are prepared. We meet two or three times a week with the team (of government and business experts) to strengthen the various measures," Sheinbaum said.

Other countries have threatened countermeasures as well, even as they have sought to strike deals with the White House to stave off the tariffs.

Japanese Prime Minister Shigeru Ishiba pledged Tuesday to provide financing and procurement support to domestic companies in response to additional U.S. tariffs on automobiles. During a press conference, Ishiba said that if the U.S. implements a 25 percent tariff on car imports, the government will set up designated consultation offices in about 1,000 locations across Japan to meet the funding needs of affected companies.

At the same time, his government is seeking dialogue with the U.S. to exempt Japan from additional tariffs on automobiles and other products.

It was not clear whether those negotiation efforts would succeed ahead of Wednesday, but the hope is that they would lead Trump to back down in the coming weeks, according to a person familiar with the conversations.

(With input from agencies)