Investors around the world are betting that President Trump’s higher-than-expected tariffs on imports on countries deemed to be running unfair trade surpluses with America will put pressure on corporate profits and might even trigger a global recession.

After Wall Street prices rose on Wednesday, indicating diminishing fears about the severity of the levies, the president announced new tariffs that ranged up to 50 percent on some Asian exporters. That sent stock markets about 3 percent lower in Japan and Europe and pushed the major American equity indexes down between 4 percent and 6 percent.   

“Trump’s tariff plan probably represents a shift for markets to quickly move from max uncertainty to max pessimism, although if countries retaliate — and Europe and China are talking like they will — rates could go up even further and drive another leg down for markets,” the chief equity strategist for LPL Financial in Boston, Jeff Buchbinder, said in a note to the Sun. 

Communist China was hit with a 34 percent rate, which combined with an existing 20 percent brought its overall levy to 54 percent. The European Union was assigned a new 20 percent rate. The round of tariffs on Tuesday were meant to be reciprocal, punishing countries with surpluses that are based on “factors that prevent trade from balancing,” according to the Office of the U.S. Trade Representative. 

Multiple observers said the new levels are consistent with a simple formula that did not take account of specific factors. A contributor to the Atlantic and Fast Company, James Surowiecki, wrote on X: “They didn’t actually calculate tariff rates + non-tariff barriers, as they say they did. Instead, for every country, they just took our trade deficit with that country and divided it by the country’s exports to us.”

Whatever the calculation method — and there is also a 10 percent blanket tariff on all imports — the risk to the economy is that the levies are not likely to be entirely  negotiated away, as President Trump and Secretary Bessent have suggested might happen. Even if they can be reduced, the uncertainty about the government’s policy would make it difficult for companies, foreign and domestic, to commit to investing in production in America, which is one of the goals of the tariffs. 

Although the levies are meant to aid the American economy by encouraging domestic production and reducing barriers to American exports, along with providing revenue to the Treasury, they are likely to have a depressing effect in the near term, according to the chief economist for Dallas-based Comerica Bank, Bill Adams. 

“Tariff increases in the second Trump administration likely amount to a roughly 25% tax increase on the $3.3 trillion of U.S. annual goods imports, equivalent to a tax hike of 2%-3% of U.S.,” he wrote in a note to investors. “That’s equivalent to more than doubling the effective federal corporate tax rate.

“If tariffs stay in effect as announced, foreign sellers will likely absorb some of the cost, as will American importers. But even so the increase will likely cause a 3% to 5% cumulative incremental increase in consumer prices above the trend rate of inflation over the next year.”

The dollar weakened against other major currencies Thursday, falling about 1.7 percent versus the ICE Futures Dollar Index, and Treasury bond yields also declined. That could be taken as a sign that investors see a recession looming and do not want to hold American assets. It could also encourage the Federal Reserve to reduce interest rates, even in the face of inflation and the fact that the value of the dollar was less than a 3,100th of an ounce of gold Thursday afternoon.

In Thursday’s stock trading Apple was a notable casualty. The company produces almost all of its iPhones in China and most of its other hardware outside America. Its stock fell more than 9 percent, bringing the loss for the year to almost 17 percent. Among sectors, consumer staples eked out a gain of about 0.7 percent. All other categories were lower, with energy, technology, and consumer discretionary companies falling more than 6 percent. 

“The next week will be critical as the highest tariff rates go in on April 9,” according to LPL’s Buchbinder. “Stocks should stabilize once negotiations start to bear fruit and take rates down, assuming it’s clear to markets that no meaningful tariff rates will be increased further because of retaliation.”