President Donald Trump said on Wednesday he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of the country's biggest trading partners, a move that could escalate a trade war and upend the global economy.

Trump displayed a chart illustrating that the U.S. will charge China a 34% tariff, the European Union a 20% tariff, Vietnam a 46% tariff, Japan 24%, India 26%, South Korea 25%, Thailand 36% and more.

In a statement published Wednesday night to explain its methodology for tariffs that rocked the globe, the United States Trade Representative detailed a formula that divides a country’s trade surplus with the U.S. by its total exports, based on data from the U.S. Census Bureau for 2024. And then that number was divided by two, producing the “discounted” rate.

China, for instance, had a trade surplus of $295 billion with the U.S. last year on total exports of $438 billion — a ratio of 68%. Divided by two according to Trump’s formula, that yielded a tariff rate of 34%. The same calculations roughly produced the rates for other economies like Japan, South Korea and the European Union.

The formula for calculating reciprocal tariffs by the US.

Here is a compilation of reactions from experts and analysts:

Tai Hui, APAC Chief Market Strategist, J.P. Morgan Asset Management

“Today’s announcement could potentially raise U.S. average tariff rates to levels not seen since the early 20th century. If these tariffs persist, they could materially impact inflation, as U.S. manufacturing struggles to ramp up capacity and supply chains pass on costs to consumers. For instance, advanced semiconductor manufacturers in Taiwan may not absorb tariff costs without viable substitutes.

“The scale of these tariffs raises concerns about growth risks. U.S. consumers may cut back on spending due to pricier imports, and businesses might delay capital expenditures amid uncertainty about the tariffs’ full impact and potential retaliation from trade partners.”

Analysts from FICC and Equities, Goldman

“Tariff - worse than expected as President Trump imposed 10% on all U.S. import, effectively Apr 5 where reciprocal higher duty hit E.U., China and Vietnam the hardest, effective on April 9. Canada and Mexico 25% tariff in place but not subject to new tariff. Our sales trading desk noted long selling of tech names and aggressive HF shorting in macro products. This is on top of the heavy de-risking that we witnessed for weeks inpreparation for the event. Tilton thinks we are likely getting retaliation from big economies E.U. and China but rest of the smaller countries have to sit down with the U.S. for "deals" or suffer from export pains. The start with such higher rate is perhaps a negotiation tactics and could see future potential de escalation but for now, sell first and continue to brace for volatility. Stay with defensives, div plays, domestic centric names and long gold.”

Analyst Dan Ives, Wedbush

Wedbush analyst Dan Ives characterized the announcement as “worse than the worst-case scenario.”

“While there are many details to be worked out and investors will focus on the specifics over the coming 24 hours, the jaw-dropper was the China reciprocal tariff of 34%. E.U. at 20% is the other major one,” Ives said.

Tom Kenny, Senior International Economist, ANZ

“Today’s announced U.S. reciprocal tariffs are worse than expected. The effective tariff rate on U.S. merchandise imports is likely to climb to the 20-25% range, the highest since the early 1900s.

Yields on inflation-indexed bonds were higher and equities sold off after the announcement, suggesting the market thinks these tariffs will hurt growth and add to inflation. Market pricing of the federal funds rate points to cuts from the Federal Reserve coming sooner.”

Bernstein Analysts

"We remain concerned that vehicle and parts tariffs are here to stay and will add a substantial cost burden to the sector. If automotive tariffs are not reversed but instead extended, we see further downside risks to automotive stocks."

David Swartz, Analyst at Morningstar Following Sportswear

"The huge tariff on imports from Vietnam is clearly negative for Nike, Adidas, and others in the sportswear space. Athletic footwear cannot easily be produced in other countries due to the complexity of manufacturing. Making it worse, tariffs are being imposed on other Asian countries."

"The industry will not panic and react immediately. Over time, if the tariffs hold, prices on sportswear will increase and producers could suffer lower margins."

"The chances that any of this leads to substantial manufacturing of footwear and apparel in the U.S. are practically zero."