What Happens If U.S. Imposes Reciprocal Tariffs

The U.S. plans to announce reciprocal tariffs this week. This is a continuation of the tariff threats among U.S. trade partners.What will happen if President Trump’s tariffs go through?A reciprocal tariff is the practice of granting mutual concessions in trade. It is supposed to encourage trading partners to lower their tariffs. Unfortunately, this will likely hurt the U.S. economy. Recently, the U.S. threatened tariffs against Mexico and Canada, only to delay them for a month. Early Saturday morning, President Trump backed down on tariffs against China. He said the Commerce Department would need time to have operations in place for them.Chinese tech stocks entered a bull market as contrarian traders bet on the rally. DeepSeek’s popularity lifted Alibaba (BABA), PDD (PDD), JD (JD), Tencent (TCEHY), and Baidu (BIDU).Tariffs would ultimately strengthen the country that imports the most goods. The U.S. dollar (DXY) strengthens whenever markets think the tariff will go through. Treasury bond yields maturing before 10 years fell as prices rose. U.S. debt rises in value.Your TakeawayTraders may enjoy the volatility in U.S. indexes for now. Eventually, markets will tune out of the tariff threats. In the medium term, after the U.S. imposes tariffs, specific sectors will underperform. This includes the steel industry. The automotive sector has the most to lose in a tariff war. Car part prices rise as they move across borders.