The latest tariff announcement has increased the cumulative total on Chinese imports to 104%. Along with other tariffs imposed last week, an additional 84% tariff will go into effect at midnight. During his previous term, President Trump had imposed tariffs of 25% or 10% on a wide range of Chinese exports.
The news of the tariff hike caused the stock market to fluctuate. Major indexes initially rose by approximately 4% in early trading but eventually turned negative as the market closed on Tuesday.
Homebuilders, who heavily rely on Chinese imports for hardware, appliances, glass, and plumbing fixtures, are among the hardest hit by the tariffs. While other countries like Mexico, Canada, and Vietnam also supply construction materials to the U.S., China accounts for a significantly higher portion of imports and now faces an exceptionally high tariff rate, as reported by the National Association of Homebuilders.
Publicly traded homebuilders saw a decline in their stocks within an hour of the tariff announcement. Companies like LGI Homes (8%), KB Home (3%), D.R. Horton (3%), Tri Pointe Homes (2.5%), Toll Brothers (2.4%), and Lennar (2%) all experienced decreases.
President Trump’s decision to escalate tariffs was a response to China imposing a reciprocal tariff rate of 34% on the United States, matching what Trump had set for China previously.
Trump had promised that the new global tariff rates would align with those imposed by other countries on the United States, but recent findings suggest otherwise. The methodology used by the Trump administration to calculate the new rates, as uncovered by internet researchers, has led to discrepancies.
For instance, while Japan imposes a 2% tariff rate on the U.S., Trump plans to implement a 24% tariff on them, despite Japan being a reliable trade partner and ally.
The Trump administration’s stance on the tariff strategy has caused division, with some suggesting a prolonged approach while others hinting at a willingness to negotiate deals.
Less than a week since the global tariffs were unveiled, the market turmoil has already created discord among business leaders and members of the Trump administration. Financial industry leaders publicly expressed concern over the levies on Monday, albeit cautiously.
Elon Musk has also weighed in on the matter, proposing that the tariff rate on the European Union, set to be 20% at midnight, should be reduced to zero. He has also criticized Trump advisor Peter Navarro, a vocal advocate of high tariffs, through personal attacks.