By PAUL WISEMAN, Associated Press Economics Writer

WASHINGTON (AP) — By declaring a trade war on the rest of the world, President Donald Trump has panicked global financial markets, raised the risk of a recession and broken the political and economic alliances that made much of the world stable for business after World War II.

Trump’s latest round of tariffs went into full effect at midnight Wednesday, with higher import tax rates on dozens of countries and territories taking hold.

Economists are puzzled to see Trump trying to overhaul the existing economic order and doing it so soon after inheriting the strongest economy in the world. Many of the trading partners he accuses of ripping off U.S. businesses and workers were already floundering.

Commerce Secretary Howard Lutnick holds a chart as President Donald Trump speaks during an event to announce new tariffs in the Rose Garden at the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Mark Schiefelbein)

“There is a deep irony in Trump claiming unfair treatment of the American economy at a time when it was growing robustly while every other major economy had stalled or was losing growth momentum,” said Eswar Prasad, professor of trade policy at Cornell University. “In an even greater irony, the Trump tariffs are likely to end America’s remarkable run of success and crash the economy, job growth and financial markets.’’

Trump and his trade advisers insist that the rules governing global commerce put the United States at a distinct disadvantage. But mainstream economists — whose views Trump and his advisers disdain — say the president has a warped idea of world trade, especially a preoccupation with trade deficits, which they say do nothing to impede growth.

The administration accuses other countries of erecting unfair trade barriers to keep out American exports and using underhanded tactics to promote their own. In Trump’s telling, his tariffs are a long-overdue reckoning: The U.S. is the victim of an economic mugging by Europe, China, Mexico, Japan and even Canada.

It’s true that some countries charge higher taxes on imports than the United States does. Some manipulate their currencies lower to ensure that their goods are price-competitive in international markets. Some governments lavish their industries with subsidies to give them an edge.

However, the United States is still the second-largest exporter in the world, after China. The U.S. exported $3.1 trillion of goods and services in 2023, far ahead of third-place Germany at $2 trillion.

The fear that Trump’s remedies are deadlier than the maladies he’s trying to cure has sent investors fleeing American stocks. Since Trump announced sweeping import taxes on April 2, the S&P 500 has cratered 12%.

Despite high trade deficits, the US economy is strong

Trump and his advisers point to America’s lopsided trade numbers — year after year of huge deficits — as proof of foreigners’ perfidy. He’s seeking to restore justice and millions of long-gone U.S. factory jobs by taxing imports at rates not seen in America since the days of the horse and buggy.

“They’ve taken so much of our wealth away from us,” the president declared last week at a White House Rose Garden ceremony to celebrate the tariffs announcement. “We’re not going to let that happen. We truly can be very wealthy. We can be so much wealthier than any country.’’

But the U.S. is already the wealthiest major economy in the world. And the International Monetary Fund in January forecast that the United States would outgrow every other major advanced economy this year.

The New York Stock Exchange is seen in New York, Tuesday, April 8, 2025. (AP Photo/Seth Wenig)

China and India did grow faster than the United States over the past decade, but their living standards still don’t come close to those in the U.S.

Manufacturing in the U.S. has been fading for decades. There is widespread agreement that many American manufacturers couldn’t compete with an influx of cheap imports after China joined the World Trade Organization in 2001. Factories closed, workers were laid off and heartland communities withered.

Four years later, nearly 3 million manufacturing jobs had been lost, though robots and other forms of automation probably did at least as much to reduce factory jobs as the “China shock.’’

Tariffs are Trump’s all-purpose weapon

To turn around this long decline, Trump has repeatedly unsheathed the tariffs that are his weapon of choice. Since returning to the White House in January, he’s plastered 25% taxes on foreign cars, steel and aluminum. He’s hit Chinese imports with 20% levies, on top of hefty tariffs he imposed on China during his first term.

On April 2, he blasted his big bazooka: 10% “baseline’’ tariffs on just about everybody and “reciprocal’’ tariffs on everyone else that the Trump team identified as bad actors, including tiny Lesotho (a 50% import tax) and China (34% before adding earlier levies).

President Donald Trump arrives to speak during an event to announce new tariffs in the Rose Garden of the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Evan Vucci)

Trump views tariffs as an all-purpose economic fix that will protect American industries, encourage companies to open factories in America, raise money for the U.S. Treasury and give him leverage to bend other countries to his will, even on issues that have nothing to do with trade, such as drug trafficking and immigration.

The president also sees a smoking gun: The United States has bought more from other countries than it has sold them every year for the past half-century. In 2024, the U.S. trade deficit in goods and services came to a whopping $918 billion, the second-highest amount on record.

Trump trade adviser Peter Navarro calls America’s trade deficits “the sum of all cheating’’ by other countries.

However, economists say trade deficits aren’t a sign of national weakness. The U.S. economy has nearly quadrupled in size, adjusted for inflation, during that half-century of trade deficits.

“There is no reason to think that a bigger trade deficit means lower growth,” said former IMF chief economist Maurice Obstfeld, senior fellow at the Peterson Institute of International Economics and an economist at the University of California, Berkeley. “In fact, the opposite is closer to the truth in many countries.”

A trade deficit, Obstfeld said, does not mean a country is losing through trade or being “ripped off.”

Spend a lot, save a little and see trade deficits swell

The faster the U.S. economy grows, in fact, the more imports Americans tend to buy and the wider the trade deficit tends to get. The U.S. trade deficit — the gap between what it sells and what it buys from foreign countries — hit a record $945 billion in 2022 as the American economy roared back from COVID-19 lockdowns. Trade deficits typically fall sharply in recessions.

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Nor are trade deficits primarily inflicted on America by other countries’ unfair trading practices. To economists, they’re a homegrown product, the result of Americans’ propensity to save little and consume more than they produce.

American shoppers’ famous appetite for spending more than the country makes means that a chunk of the spending is used for imports. If the United States boosted its saving — for example, by reducing its budget deficits — then that would reduce its trade deficit as well, economists say.

“It’s not like the rest of the world has been ripping us off for decades,” said Jay Bryson, chief economist at Wells Fargo. “It’s because we don’t save enough.”

The flip side of America’s low savings and big trade deficits is a steady inflow of foreign investment as other countries sink their export earnings into the United States. Direct foreign investment into the U.S. came to $349 billion in 2023, the World Bank reported, nearly double No. 2 Singapore’s inflows.

The only scenario in which tariffs reduce the U.S. deficit is if they cause investment in the U.S. to crash, said Barry Eichengreen, an economist at the University of California, Berkeley. That “would be a disaster.’’

Harvard University economist Dani Rodrik said a “well-designed industrial policy” supported by select tariffs “might have fostered increased investment and capacity in manufacturing.”

Instead, Rodrik said, Trump’s actions just “throw up a lot of uncertainty” and alienate America’s best allies, making for “a terrible policy all in all.’’

AP Economics Writer Christopher Rugaber contributed to this report.

The Gophers are turning Koi Perich into a two-way — heck, a three-way — player, and they are stitching it all together this spring.

Let’s start with the true sophomore’s practice jersey, which is half maroon (like all defensive players wear) and half white (like the offensive guys). The Esko native’s No. 3 is split vertically down the middle.

Next have been the brief glimpses of the U safety taking an offensive snap here and there during two open-to-media practices over the last two weeks; the Gophers don’t dig deep into its playbook during these sessions, but they have been cool with showing that.

“He’s too good of a football player not to be on the field somehow, someway, throughout the entire game, not just on one side,” head coach P.J. Fleck said Tuesday. “I think (offensive coordinator Greg) Harbaugh has done a really good job of giving him what he can handle, but whatever we give him, we want him to be really good at.”

As a true freshman, Perich primarily played safety, returned punts and kickoffs and cameo’d on offense, but didn’t record a carry or a catch. That will change in 2025.

“This isn’t just a gadget thing,” Fleck clarified. “We’re not looking at him to be a gadget. He’s going to be an athlete on this football team and make plays on every side of the ball, plus the return game. He’s done a really good job of handling all of it.”

The practice jersey is an indication of their commitment. It spawned from quarterback Drake Lindsey saying it was hard to see Perich when he was running routes over the middle of the field. P.J. Fleck came up with the idea, Perich said, and equipment manager Brady Gagnon made it happen.

Travis Hunter won the Heisman Trophy playing both cornerback and wide receiver at Colorado last season. At this point, it’s way too much to compare Perich to Hunter, a projected top NFL draft pick later this month, but the game-changing ability resides in Perich.

Perich’s five interceptions last season was tied for fourth in the nation; two of them sealed wins against Southern California and UCLA. It led to him being named all-Big Ten first team. On special teams, he averaged 9.4 yards per punt return, including a 60-yarder in the comeback attempt at Michigan, and put up 19.6 yards per kickoff return.

“It means a lot,” Perich said about also playing on offense. “But that obviously comes with more work. Every opportunity is not given, it’s earned. So with that, you just gotta keep putting in more work and more work. That’s what comes with it.”

Perich’s offensive role this spring has been catching a periodic pass in the two open practices; one spotted in each session. How much and where offensive coordinator Greg Harbaugh will use Perich will start to be reveled in season opener against Buffalo on Aug. 28 — or more likely at California on Sept. 13 and the Big Ten opener versus Rutgers on Sept. 27.

Harbaugh, of course, wasn’t willing to detail what Perich’s offensive role will be. “He’s a pretty good player, so I will work with him,” he deadpanned.

For Perich in 2025, it isn’t just the grandiose idea of playing everywhere, it’s the granular details in being a safety. Fleck said a point of emphasis for Perich will be a higher attention within fundamentals.

“I think when you play as a true freshman, you’re kind of thrown in the fire and you’re just making plays and you’re running around,” Fleck said in March at the start of spring practices. “Yes, you’re within the scheme. Yes, you’re doing your assignment. You’re doing it right, but are you doing it as efficiently as you possibly can?”

Perich, who is listed at 6-foot-1 and 200 pounds, has his own list of things he wants to improve: his man-to-man coverage skills and working on his releases from the line of scrimmage as a wide receiver.

On Tuesday, Fleck noticed how Perich could improve his positioning and hand placement when taking on blocks and popped over to tell him how he should improve it. These finer points can be more easily addressed in spring practices, something Perich didn’t do as he finished up his senior year in northeastern Minnesota a year ago.

“Isn’t that hard to believe: the kid got here in June?” Fleck said.

On top of defense and special teams at Esko, Perich played running back and reciever. “You just develop those ball skills,” he said. “And I think those carry over for anything you’re doing.”

And his role also appears to be growing on defense, with new defensive coordinator Danny Collins putting Perich in at nickel back.

“I just try to come in and put in more work each day and hopefully everybody can see that,” Perich said about becoming a team leader. “And they can build off what I’m doing, either if it’s in the weight room or on the field, and just work off my energy. That’s what I try to do each and every day.”

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By ELAINE KURTENBACH, Associated Press Business Writer

BANGKOK (AP) — World shares slumped on Wednesday after U.S. President Donald Trump’s latest tariff hikes took effect and he threatened to add still more.

Uncertainty is running high about what Trump will do next in his trade war. In a speech Tuesday night he said plans tariffs on pharmaceuticals so that more medications would be made in the U.S.

European markets extended their losses. Germany’s DAX slipped 2.5% to 19,762.13. In Paris, the CAC 40 declined 2.6% to 6,917.13. Britain’s FTSE 100 gave up 2.6% to 7,704.82.

 

Although Trump’s latest tariffs include a massive 104% levy on U.S. imports of Chinese products, markets in China reversed early losses, gaining ground on Wednesday.

Massive share buybacks by big state-run investment funds and other state companies that often are instructed to support the market in times of crisis helped boost stock prices. Investors also are expecting the government to step up spending and other measures to help counter the impact of the tariffs, which will hit hardest the small manufacturers and traders that create the most jobs.

Beijing issued a policy paper Wednesday reiterating China’s right to protect its businesses with unspecified countermeasures, while it emphasized it preferred to resolve trade issues through dialogue.

The paper also argued that taking into account trade in services and U.S. companies’ operations in China, economic exchange between the two countries is “roughly in balance.”

Hong Kong’s Hang Seng rose 0.7%, while the Shanghai Composite index closed 1.3% higher.

Thailand’s benchmark also rose, apparently due to speculation that Beijing might be preparing to hold talks with the Trump administration. The unconfirmed rumors helped push the future for the S&P 500 up 0.3%, while that for the Dow was unchanged.

Elsewhere, markets remained gloomy. Japan’s Nikkei 225 closed 3.9% lower, at 31,714.03 and Prime Minister Shigeru Ishiba convened a meeting of top financial ministers to reiterate his call for them to do what they can to mitigate the damage from tariffs to Japanese automakers and other manufacturers.

Taiwan led the losses in Asia, as its Taiex plunged 5.8%. Big tech industries were among the biggest decliners. Computer chip giant TSMC Corp. dropped 3.8% while iPhone maker Hon Hai Precision Industry plunged 10%.

In India, the Sensex declined 0.5% as the central bank cut its benchmark interest rate, while Bangkok’s SET shed 0.8%.

South Korea’s Kospi lost 1.7% to 2,293.70, and the government said it would provide help for its beleaguered automakers. The S&P/ASX 200 in Australia declined 1.8% to 7,375.00. Shares in New Zealand also fell.

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On Tuesday, the S&P 500 dropped 1.6% after wiping out an early gain of 4.1%. That took it nearly 19% below its record set in February. The Dow Jones Industrial Average dropped 0.8%, while the Nasdaq composite lost 2.1%.

Stocks had rallied globally on Tuesday, with indexes up 6% in Tokyo, 2.5% in Paris and 1.6% in Shanghai. Any optimism or buying enthusiasm appeared to have dissipated by the time the sharply higher tariffs became reality.

Analysts say the markets will have more swings up and down given uncertainty over how long Trump will keep the stiff tariffs on imports, which will raise prices for U.S. shoppers and slow the economy. If they persist, economists and investors expect them to cause a recession. If Trump lowers them through negotiations relatively quickly, the worst-case scenario might be avoided.

Hope still remains on Wall Street that negotiations may be possible, which helped drive the morning’s rally. Trump said Tuesday that a conversation with South Korea’s acting president helped them reach the “confines and probability of a great DEAL for both countries.”

Trump’s trade war is an attack on the globalization that’s shaped the world’s economy and helped bring down prices for products on store shelves but also caused manufacturing jobs to leave for other countries. Trump has said he wants to narrow trade deficits, which measure how much more the United States imports from other countries than it sends to them as exports.

In other dealings early Wednesday, U.S. benchmark crude oil fell $2.43 to $57.15 per barrel. Brent crude, the international standard, shed $2.47 to $60.35 per barrel.

The U.S. dollar fell to 145.22 Japanese yen from 146.29 yen. The euro rose to $1.1036 from $1.0995.

The price of gold rose $72 to $3,062 an ounce.

By HUIZHONG WU, Associated Press

BANGKOK (AP) — China again vowed to “fight to the end” Wednesday in an escalating trade war with the U.S. as it announced it would raise tariffs on American goods to 84% from Thursday.

Beijing also added an array of countermeasures after U.S. President Donald Trump raised the total tariff on imports from China to 104%. Beijing said it was launching an additional suit against the U.S. at the World Trade Organization and placed further restrictions on American companies’ trade with Chinese companies.

“If the U.S. insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end,” the Ministry of Commerce wrote in a statement introducing its white paper on trade with the U.S.

The government declined to say whether it would negotiate with the White House, as many other countries have started doing.

On Friday, China announced a 34% tariff on all goods imported from the U.S, export controls on rare earths minerals, and a slew of other measures in response to Trump’s “Liberation Day” tariffs. Trump then added an additional 50% tariff on goods from China, saying negotiations with them were terminated.

Wednesday’s newest measures include adding 11 American companies to a so-called “unreliable entities” list that would bar Chinese companies from selling them dual-use goods. Among the companies are American Photonics, and SYNEXXUS, both of whom work with the American military.

So far, China has not appeared interested in bargaining. “If the U.S. truly wants to resolve issues through dialogue and negotiation, it should adopt an attitude of equality, respect and mutual benefit,” said Ministry of Foreign Affairs spokesman Lin Jian Wednesday.

The paper says that the U.S. has not honored the promises it made in the phase 1 trade deal concluded during Trump’s first term. As an example, it said that a U.S. law that would ban TikTok unless it is sold by its Chinese parent company violates a promise that neither would “pressure the other party to transfer technology to its own individuals.”

Trump signed an order to keep TikTok running for another 75 days last week after a potential deal to sell the app to American owners was put on ice. ByteDance representatives called the White House to indicate that China would no longer approve the deal until there could be negotiations about trade and tariffs.

The paper also argued that taking into account trade in services and U.S. companies’ domestic Chinese branches, economic exchange between the two countries is “roughly in balance.”

It says that China had a trade in services deficit with the U.S. of $26.57 billion in 2023, which is composed of industries like insurance, banking and accounting. Trump’s tariffs were designed to close trade deficits with foreign countries, but those were calculated only based on trades in physical, tangible goods.

“History and facts have proven that the United States’ increase in tariffs will not solve its own problems,” said the statement from the Chinese commerce ministry. “Instead, it will trigger sharp fluctuations in financial markets, push up U.S. inflation pressure, weaken the U.S. industrial base and increase the risk of a U.S. economic recession, which will ultimately only backfire on itself.

AP researcher Yu Bing and producer Liu Zheng contributed to this report from Beijing.