Trump’s ‘Liberation Day’ tariffs were worse than expected—sparking a global selloff

• In today’s CEO Daily: Diane Brady on Trump’s new taxes for international trade.
• The big story: Tariffs were worse than expected.
• The markets: Global selloff under way.
• Analyst notes from Wedbush, EY, and Swoop Funding on—you guessed it—the tariffs, jobs, and Tesla.
• Plus: All the news and watercooler chat from Fortune.

Good morning. Friend or foe? It hardly mattered yesterday as Donald Trump unveiled sweeping targets against all the trading partners of the United States. The headline numbers to know: A 10% baseline tariff on all imports, with specific and higher tariffs on some countries, including 34% on China (on top of the existing 20% tariffs), 20% on the EU and as high as 46% and 49% on Vietnam and Cambodia respectively. “They do it to us, we do it to them,” the President said during the Rose Garden unveiling. Some food for thought as the fallout begins:

It's worse than expected. As the White House was ironing out details of the plan deep into Tuesday, markets were showing some signs of life as investors hoped for last-minute leniency. But stock futures took a dive following Wednesday’s announcement. Only about half of what Americans buy is made in America, according to Commerce Department data, and industries like the auto sector that have complex global supply chains. 

This undermines manufacturers’ China+1 strategy. Some Asian countries are especially hard hit with tariffs of 40% or more, dealing a blow to U.S. manufacturers’ push to diversify production beyond China to low-cost neighbors like Vietnam, Bangladesh and Cambodia, especially in areas like textiles and electronics. Gap Inc.—home to Gap, Athleta, Banana Republic and Old Navy—has reduced its exposure to China in recent years but still sources the vast majority of its apparel from Asian countries targeted by the new tariffs. Change takes time. 

A global backlash could hurt all companies. Trump described yesterday’s tariffs as “kind” to America’s trading partners. From the anger of foreign leaders to the foreign consumers boycotting U.S. products and travel, it’s clear that our partners disagree. Hostility is bad for business, with economists from EY, Goldman Sachs, and Moodys predicting lower growth from self-inflicted tariff wounds. I spoke this week with Niccolo De Masi, CEO of quantum computing company IonQ. “We’re building all of our stuff in America,” he said. “We’re not impacted negatively by tariffs but we are realistic that our ability to succeed in Asia and Europe comes with having more of a presence there.” That’s harder to do if a trade war whips up nationalist instincts.

This could devastate hard-hit economies and industries. Jacques Vandermeiren, the CEO of the Port of Antwerp-Bruges, Europe’s second largest port, told my colleague Peter Vanham earlier this fall, “If Trump puts in place tariffs of up to 10 percent, we’ll deal.” Substantially higher than that, Vandermeiren warned, could spell disaster for Europe’s steel, aluminum, auto, and other export-oriented industries. Switzerland’s struggling watch industry, which exports more of its products to the U.S. than any other country, will now face a hefty 31% tariff. Will those who crave a Rolex or Patek Philippe settle for a substitute? I doubt it.

There will be much negotiating in the coming days and business leaders know from experience that what appears on paper at a press conference may not translate to action at the border–or can be swiftly reversed. And U.S. consumers, whose spending accounts for more than two-thirds of GDP, aren’t looking that excited by all these tariffs that they’re told will help them in the end. Consumer sentiment tracked by the University of Michigan has been trending down this year to the lowest level since 2022.

Adam Smith once wrote that nations rarely thrive by beggaring their neighbors. That was in 1776, when mercantilism was dying and the U.S. was being born. Freed from British rule, the young nation used tariffs to develop homegrown industries that later competed on the world stage. With a globally connected U.S now returning to tariff levels last seen in the early 1900s, as cars were just coming on the scene, the impact could be very different.

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

This story was originally featured on Fortune.com