President Trump reset U.S. trade policy on Wednesday by announcing a 10-percent general tariff on all imports to the U.S. with the exception of Canada and Mexico, along with targeted tariffs on dozens of additional countries.

The move makes good on one of the central promises of Trump’s presidential campaign and represents a course-correction in U.S. trade posture that Trump started during his first term.

Trump’s general tariff follows two months of stop-and-start tariff announcements from the new administration and contains many shades of gray, including new ways of calculating costs that have left some economists scratching their heads.

“Our country and its taxpayers have been ripped off for more than 50 years, but it’s not going to happen anymore,” Trump said during a speech in the White House Rose Garden.

Businesses and many trade groups reacted with harsh criticism, and futures markets took a dive on the announcements, which took place after markets closed.

Some labor groups and others that have consistently criticized free-trade policies as harming U.S. manufacturers and labor unions reacted positively.

Here are five takeaways from Trump’s tariff announcement.

Trump shatters a century of trade policy in one day

After months of teasing, imposing and then walking back new tariffs, Trump pitched his new import tax regime as a fundamental shift in U.S. economic and foreign policy.

Since World War II and especially over the last few decades, the U.S. has pursued free trade policies that have mostly lowered barriers to international commerce and made it easier for companies to produce and sell goods across international borders.

A major part of that agenda has been lowering tariffs and promoting international supply chains with deals and forums like the North American Free Trade Agreement, the General Agreement on Tariffs and Trade and the World Trade Organization.

Trump’s general tariff is perhaps the largest blow to that agenda since he helped to scuttle the Trans-Pacific Partnership in the run-up to his first term as president, during which he pursued a trade war that appears modest by the standards of his second term.

Massive implications for the global economy

Businesses and trade groups saw Trump’s tariff announcement as nothing short of a “game changer.”

Many looked to history books to find a precedent for the evolving U.S. trade posture, which used to congeal around a so-called Washington consensus that has been eroded over the course of the first Trump administration and the Biden administration.

“The U.S. tariff rate on all imports is now around 22 percent from 2.5 percent in 2024. That rate was last seen around 1910,” Olu Sonola, head of research on the U.S. economy at Fitch Ratings, wrote in a commentary.

Sonola said that many countries could fall into recession as a result of the tariffs, especially if they stay in place.

“This is a game changer, not only for the U.S. economy but for the global economy. Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time,” he wrote.

Trump has reversed course on multiple tariff orders during his first 100 days in office, including on 25-percent tariffs announced for Canada and Mexico and for the “de minimis exemption” for Chinese imports that would have tariffed products worth $800 or less.

The U.S. could also face serious economic blowback from the tariffs and retaliation from trading partners. Economists at Goldman Sachs expect Trump’s tariffs to boost inflation, slow the economy and raise the unemployment rate, according to an analysis released Wednesday.

The news stunned markets

After-hours trading of stocks, which takes place in futures contract markets, showed a decisively negative response to the news, following several weeks of souring sentiment from both consumers and businesses amid numerous policy announcements and reversals by the Trump administration.

S&P 500 futures were down more than 3.6 percent in after-hours trading.

Dow Jones Industrial Average futures were down more than 2.5 percent, and tech-heavy Nasdaq composite futures were down more than 4.6 percent.

Trump’s announcement took place after markets closed for the day on Wednesday.

Analysts described President Trump’s latest slate of tariffs Wednesday as “worse than the worst case scenario” for tech stocks, which powered much of the market’s gains under Trump’s first term.

Tech firms, such as Apple, Nvidia and other chipmakers, could be particularly impacted by the hefty new tariffs on China and Taiwan, according to Wedbush Securities analysts. The administration announced a 34 percent tariff on Beijing and a 32 percent tariff on Taipei.

“Tech stocks will clearly be under major pressure on this announcement as the worries about demand destruction, supply chains, and especially the China/Taiwan piece of the tariffs,” the analysts wrote in a note Wednesday evening. 

The policy hits China hard

China will face an effective tariff rate as high as 54 percent under the newly announced tariffs — the highest of any country, with Cambodia coming in second at 49 percent.

U.S. economic and territorial tensions with China have been rising in recent years, and the tariffs mark a significant escalation. In addition to being one of the top U.S. trading partners, China holds large amounts of U.S. debt, and the economies of the two countries are highly intertwined.

Experts on Chinese production have told The Hill that a 10 to 20-percent tariff could largely be absorbed by the country through a combination of currency devaluation, private sector subsidies and margin adjustments.

But the higher-level tariffs announced Wednesday could have an impact on Chinese domestic production, which is heavily geared toward the export market. The Chinese Ministry of Foreign Affairs did not have any comments on the tariffs on their website as of 7 p.m. EDT.

Confusion about how Trump got to rates

Economists expressed concern about how exactly the White House arrived at country-specific tariffs, which included a huge range of different rates.

The White House calculations of the various rates were based on measures of market access given or not given to U.S. exporters as well as “non-tariff barriers” to trade that are up to policymakers to quantify as they see fit.

Some economists reacted Wednesday by saying that the term “tariff” for the new White House policies wasn’t even appropriate, let alone the characterization of the tariffs as “reciprocal.”

“Those numbers are not tariffs,” economist Kimberly Clausing wrote in a social media commentary. “The European Union, for example, has weighted average tariff rates of around 3 percent and arguably lower on U.S. goods. So they are clearly including [value-added taxes] and who knows what else? This false reciprocity is nonsense.”