U.S. President Donald Trump on Wednesday signed an executive order on "reciprocal tariffs," imposing a "minimum baseline tariff" of 10 percent and higher rates on certain trading partners.

The "reciprocal" tariffs, Trump said, were a response to duties and other non-tariff barriers put on U.S. goods. He argued that the new levies will boost manufacturing jobs at home.

U.S. stock futures dropped sharply after the announcement, following weeks of volatile trading as investors speculated about how the incoming tariffs might affect the global economy, inflation and corporate earnings. U.S. stocks have erased nearly $5 trillion of value since February.

The scale of 'reciprocal tariffs'

All imports to the United States will be subject to 10 percent additional tariffs, except as otherwise provided, the executive order said. This will take effect on April 5.

Trump will impose an "individualized reciprocal higher tariff" on the countries and regions with which the United States "has the largest trade deficits," according to a White House document. This will take effect on April 9.

A White House official told Reuters that the higher penalties will apply to about 60 countries in all. Some goods will not be subject to the reciprocal tariff, including steel and aluminum, as well autos and auto parts already subject to Section 232 tariffs, the White House noted.

The reciprocal tariffs do not apply to certain goods, including copper, pharmaceuticals, semiconductors, lumber, gold, energy and "certain minerals that are not available in the United States," according to a White House fact sheet.

For Canada and Mexico, United States-Mexico-Canada Agreement (USMCA) compliant goods will continue to see a zero percent tariff, non-USMCA compliant goods will see a 25 percent tariff, and non-USMCA compliant energy and potash will see a 10 percent tariff, according to the White House.

In a speech from the White House Rose Garden, Trump presented a chart on "reciprocal tariffs." The chart shows that different countries and regions face different tariff rates.

For example, China will face a tariff of 34 percent, the European Union 20 percent, Vietnam 46 percent, Japan 24 percent, India 26 percent, South Korea 25 percent, Thailand 36 percent, Switzerland 31 percent, Indonesia 32 percent, Malaysia 24 percent and Cambodia 49 percent.

Trump claimed that other trading partners impose "non-monetary barriers" on the United States. The chart illustrates the tariff rates "charged" by different countries or regions to the United States, including "currency manipulation" and "trade barriers."

Objections at home

Despite Trump's claim that higher tariffs will help bring in revenue for the government and revitalize U.S. manufacturing, economists have warned that such measures will push up prices for U.S. consumers and businesses, disrupt global trade and hurt the global economy.

"The move was a significant escalation of Mr. Trump's trade fight and is likely to ripple through the global economy, driving up prices for American consumers and manufacturers while inciting retaliation from other nations," The New York Times reported.

"There is no basis for the claimed tariff-equivalent rates imposed by other countries. This is pure invention," said Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics.

"The tariffs announced are at the extreme end of forecasts," said Hufbauer. "Plus rabid characterization of foreign countries, hard to see the U.S. avoiding a recession. World growth will be down 1 percent or more," he said.

U.S. Representative Gregory Meeks, the top Democrat on the House Foreign Affairs Committee, said he would introduce legislation to end the tariffs. Such a bill has little chance of passing the Republican-controlled Congress, however.

"Trump just hit Americans with the largest regressive tax hike in modern history – massive tariffs on all imports. His reckless policies are not only crashing markets, they will disproportionately hurt working families," Meeks said.

Countermeasures from other countries

The sweeping duties would erect new barriers around the world's largest consumer economy, reversing decades of trade liberalization that have shaped the global order. Trading partners are expected to respond with countermeasures of their own that could lead to dramatically higher prices for everything from bicycles to wine.

European leaders reacted with dismay, saying a trade war would hurt consumers and benefit neither side. "We will do everything we can to work towards an agreement with the United States, with the goal of avoiding a trade war that would inevitably weaken the West in favor of other global players," Italy's prime minister, Giorgia Meloni, said.

Brazil said on Wednesday it is assessing all potential responses to the imposition of 10 percent tariffs on imports from Latin America's largest economy, while its Congress approved a bill outlining the framework for trade retaliation.

"This is not the act of a friend," Australian Prime Minister Anthony Albanese told a news conference on Thursday after Trump's tariff announcement, saying one in four Australian jobs depended on trade.

Canadian Prime Minister Mark Carney on Wednesday vowed to "fight" against Trump's sweeping tariffs, which he warned will "fundamentally change the global trading system."

"We are going to fight these tariffs with counter measures," Carney said in Ottawa.

(With input from agencies)