Trump's 'Liberation Day' tariffs are almost here: What this will mean for global trade

United States President Donald Trump is set to implement his most extensive trade measures yet on April 2, 2025, a date he has dubbed “Liberation Day.”

On this day, the administration will introduce a series of reciprocal tariffs on nations that levy duties on US exports, with the aim of reducing America’s substantial trade deficit and encouraging domestic manufacturing.

These measures are expected to affect a wide range of industries and trade partners, marking a significant escalation in Trump’s “America First” trade policy.

What is the extent of the tariffs?

The upcoming tariffs will impact countries that have large trade imbalances with the US and impose higher duties on American goods. Trump has directed officials to analyse trade policies on a country-by-country basis and impose countermeasures accordingly.

US Treasury Secretary Scott Bessent has indicated that around 15 per cent of US trading partners — dubbed the “Dirty 15” — will be the primary targets of these tariffs.

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Though the White House has not released a definitive list, reports suggest that China, the European Union, Mexico, Vietnam, Taiwan, Japan, South Korea, Canada, India, Thailand, Switzerland, Malaysia, Indonesia, Cambodia and South Africa are among the most likely candidates.

The tariffs will vary by sector , with blanket 25 per cent duties imposed on steel and aluminium imports as of mid-March. Additionally, auto imports will face tariffs starting at 12:01 am Eastern Time on April 3.

There is also a provision for 25 per cent tariffs on direct and indirect buyers of Venezuelan oil, potentially taking effect on April 2. These measures are expected to intensify trade tensions with US allies and competitors alike.

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What has the retaliation been from trading partners?

In response to Trump’s aggressive tariff strategy, major economies have already initiated countermeasures. China has imposed tariffs of 10 per cent to 15 per cent on US agricultural products, including soybeans, while the European Union has drawn up a plan to impose duties on $28 billion worth of American goods.

The EU’s retaliation, originally set to begin in April, has been temporarily delayed to allow time for further negotiations. However, European leaders have urged strong countermeasures in light of Trump’s auto tariffs, which they view as a direct economic threat.

Canada has responded with tariffs targeting approximately CAD $60 billion (USD $42 billion) worth of American products, including steel, aluminium and technology goods.

While Mexico has yet to implement retaliatory tariffs, it has signalled that it will do so in early April. The uncertainty surrounding these trade escalations has already led to economic turbulence, with businesses and investors bracing for potential long-term impacts.

How has the market reacted?

The stock market has responded sharply to the impending tariffs , with the Dow Jones Industrial Average plummeting by over 700 points on March 28, marking its steepest decline since early March.

The S&P 500 has also seen significant losses, erasing gains that had accumulated following Trump’s reelection in November 2024. Analysts attribute this market volatility to growing concerns over inflation and potential supply chain disruptions resulting from the new trade barriers.

Inflation data has further fuelled economic anxieties. The Personal Consumption Expenditures Price Index, a key metric for the Federal Reserve, recorded a 2.5 per cent increase in February compared to the previous year.

Core inflation, excluding food and energy costs, rose by 2.8 per cent, surpassing projections. These rising costs, combined with the prospect of additional tariffs, have heightened fears of an economic slowdown.

Despite these warning signs, Trump remains steadfast in his belief that the tariffs will ultimately benefit American workers by compelling businesses to relocate manufacturing operations to the US.

“I couldn’t care less if they raise prices, because people are going to start buying American-made cars,” he told NBC News in an interview.

However, economists warn that the cost of goods—including automobiles and other consumer products—will likely rise as a result, affecting everyday Americans.

What else has Trump planned?

Beyond April 2, the Trump administration is considering further trade restrictions. The US Trade Representative (USTR) is currently conducting investigations into China’s practices in the maritime and logistics sectors, with potential policy responses including hefty entrance fees for Chinese-built ships entering US ports.

The administration is also reviewing tariffs on lumber and copper imports, signalling that the trade war is far from over.

The president’s trade agenda includes additional reviews under the “America First Trade Policy,” an executive order signed upon his inauguration.

This order calls for reassessments of various trade agreements, including the US-Mexico-Canada Agreement (USMCA) and the “Phase One” trade deal with China, which was originally intended to ease trade tensions between the two nations. These reviews may lead to further tariff measures in the months ahead.

Will this work for the US economy?

Trump’s aggressive trade stance is not only reshaping US economic policy but also straining international alliances. Canadian Prime Minister Mike Carney has openly criticised the administration’s tariffs, stating that the US is “no longer a reliable partner.”

He has indicated that Canada will seek to strengthen trade relations with other nations in response. Meanwhile, European leaders, including those from Germany and France, have voiced concerns over US protectionism and are considering their own countermeasures.

The potential for a prolonged trade war poses significant political risks for Trump as well. With upcoming special elections and a divided Congress, the impact of these tariffs on the broader economy could influence voter sentiment.

While Trump has argued that his trade policies will ultimately strengthen American industry, many Republican lawmakers remain wary of the consequences, particularly as the economy shows signs of slowing.

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With inputs from agencies