Tensions rise as Donald Trump announces new tariffs, labeled ‘Liberation Day,’ set to unveil on April 2. A high-profile ceremony at the White House will follow market closures, fueling uncertainty among global trading partners. While Trump aims for reciprocal tariffs to address perceived unfair treatment, conflicting messages suggest potential lower rates. Analysts warn of economic risks, predicting negative impacts on U.S. performance and global trade, while allies prepare countermeasures in response to the tariffs.
Each passing day, the tension escalates as Donald Trump keeps everyone guessing. He has proclaimed that new tariffs will be revealed this Wednesday, April 2, which he has dubbed ‘Liberation Day’. However, amidst the theatrics, uncertainty looms over the magnitude of this latest chapter in his ongoing trade conflict, which has been intensifying for several weeks.
The announcement is set to take place during a high-profile ceremony at 4 PM local time (10 PM in Paris) at the White House, just after the New York Stock Exchange closes. This has already caused market fluctuations, as global trading partners are anxiously awaiting potential new policies. Trump has already implemented a 25% tariff on imported steel and aluminum, and starting Thursday, automobiles and their components will also face a 25% tax.
As a new wave of measures approaches, details regarding the specifics of Wednesday’s announcements remain scarce, particularly regarding which countries will be affected. Thus far, Trump has issued warnings to every nation without exception. ‘We will start with all countries, we’ll see’, he remarked on Sunday.
The Uncertainty Surrounding Tariff Levels and Targets
What approach will the U.S. administration take towards its trading partners? Initially, Trump suggested that he intended to impose ‘reciprocal’ tariffs. This means that the U.S. would adjust its customs barriers based on how each country taxes American goods. The aim is to rectify what he perceives as years of unfair treatment towards the U.S. ‘Tomorrow, it will be over for robbing America’, proclaimed his spokesperson Karoline Leavitt on Tuesday, indicating that these new tariffs should take effect ‘immediately’.
Yet, in typical fashion, Trump has also downplayed these bold threats. On Sunday, he indicated that the tariffs would be more ‘generous’ than those imposed by other countries on U.S. products. He reiterated on Monday his intention to be ‘very nice’ towards trading partners, asserting that other nations ‘have taken advantage of us, and we are going to be very nice, compared to what they have done to us’. He even claimed that American tariffs could be ‘lower’, and in some instances ‘significantly lower’ than retaliatory tariffs.
In light of these conflicting statements, major American publications have sought to clarify the situation, but ambiguity still reigns. The Washington Post has reported from three sources that White House advisors suggested implementing tariffs of around 20% on most imports. If this plan is enacted, it could ‘trigger a shockwave on stock markets and the global economy’. However, no conclusive decision has been made, according to the report.
The New York Times has noted a potential varied approach depending on the tariff rates imposed by different countries on American products. It highlights that the Trump administration may particularly target the ‘Dirty 15’, nations with the highest customs barriers, which contribute significantly to the trade deficit in the U.S. Among these are China, Mexico, and Vietnam, followed by Germany and Japan, based on data from the U.S. Census Bureau.
Projected Impacts in the U.S. and Globally
Meanwhile, U.S. economic allies are strategizing their responses, involving countermeasures and potential tariff reductions. For instance, in the European Union, leaders have expressed a desire to avoid retaliatory actions but have a robust plan ready if necessary. European Commission President Ursula von der Leyen stated that the EU has already announced plans to impose tariffs on a range of American products, from boats to bourbon, starting mid-April in response to the tariffs on steel and aluminum.
On the financial markets, while Asian and European stocks experienced a slight recovery after a substantial drop on Monday, Wall Street opened lower amidst growing recession fears in the U.S.
The White House defends these new customs barriers, claiming they will generate significant revenue. A spokesperson asserted that Trump is acting ‘in the interest of American workers’. An official noted on Wednesday that these tariffs could yield ‘hundreds of billions of dollars, perhaps even a trillion’ over the course of a year.
However, analysts from Goldman Sachs have cautioned about the economic risks associated with an influx of tariffs, warning that it could have a negative impact akin to a consumption tax hike on household purchasing power. According to Jochen Stanzl, an analyst at CMC Markets, ‘This punitive tariff policy should lead to a decline in economic performance in the first quarter in the United States and create global uncertainty that hinders investment and trade’. He added that ‘Rising prices, declining demand, and reluctance to invest are a combination generally conducive to a recession’.