US President Donald Trump has dubbed this Wednesday as "Liberation Day" promising to unveil a round of tariffs aimed at freeing the US from reliance on foreign goods. The details of Trump’s next round of import taxes are still not clear.
Trump has vowed to pull the trigger and impose an historic barrage of tariffs on goods from overseas he claims will fund an extraordinary revival. Ten weeks after returning to the White House, Trump has said he will raise tariffs on all products from countries that charge tariffs on US exports; hit goods from Canada and Mexico with sweeping duties; introduce steep tariffs on foreign cars, computer chips and drugs; and target countries importing oil from Venezuela with duties on their US exports. This has sparked concerns among economists and the stakes are high for American families, businesses and the global economy.
US stock futures fell early Monday as traders looked ahead to “Liberation Day” for clarity on President Donald Trump’s tariff plans. In a Saturday interview with NBC News, Trump said that he “couldn’t care less” if foreign automakers raise their prices due to these new tariffs.
What's in store with Trump's new tariffs?
Trump promises that Wednesday, April 2, will be “Liberation Day” — when he imposes reciprocal dollar-for-dollar tariffs on nations that levy duties on US goods. The President plans to impose import taxes, including "reciprocal" tariffs that match rates imposed by other countries and account for subsidies. Target nations include the European Union, South Korea, Brazil, and India, according to new agency AP.
“This is the beginning of Liberation Day in America,” Trump announced. “We’re going to charge countries for doing business here and taking our jobs, our wealth, and a lot more.”
Trump's tariffs could affect these range of products. The proposed tariffs include a 25% tax on foreign automobiles, with Trump asserting that this will boost U.S. auto sales.
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Additional tariffs target specific industries such as pharmaceuticals, copper, and lumber. A 25% tariff is also planned for oil imports from Venezuela, despite the U.S. continuing to import Venezuelan oil. Goods from China will face an extra 20% tax due to concerns over fentanyl production. Meanwhile, separate tariffs on Canada and Mexico are aimed at addressing drug smuggling and illegal immigration.
While Trump argues these measures will drive domestic investment, he also suggests that negotiations could lead to reductions if favorable agreements are reached.
What Trump plans to do?
The Republican president has announced new tariffs on imported pharmaceutical drugs, copper, and lumber. He has proposed a 25% tariff on any country that imports oil from Venezuela, despite the United States doing the same.
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Additionally, imports from China now face a 20% tax due to the country’s role in fentanyl production. Trump has also imposed separate tariffs on goods from Canada and Mexico, citing efforts to curb drug smuggling and illegal immigration. Furthermore, he has expanded his 2018 steel and aluminum tariffs, raising them to 25% on all imports.
Some advisors view these tariffs as negotiation tools for trade and border security, while others argue that the revenue could help reduce the federal budget deficit. Commerce Secretary Howard Lutnick has stated that the tariffs will compel other nations to show Trump “respect.”
What it means for the US economy?
Most economic analyses say average U.S. families would have to absorb the cost of his tariffs in the form of higher prices and lower incomes. Business leaders and economists are certainly worried about the scale of his trade strategy, which the Tax Foundation already estimates could knock US gross domestic product (GDP) by roughly 0.7% and cost about 500,000 US jobs.
“The escalating tariffs are a body blow to the global trading system,” Eswar Prasad, professor of trade policy at Cornell University, and a former official at the International Monetary Fund, told The Guardian.
Economists have raised concerns that Trump's tariffs would hurt the US economy and consumers may have to pace higher price for everything- from groceries to cars and housing. The tariffs could also slow down corporate profits, slowing economic expansion.
While Trump argues that tariffs will boost job creation, they may instead lead to job losses in industries dependent on global supply chains. Economist Art Laffer estimates that auto tariffs could increase vehicle prices by $4,711 each.
Goldman Sachs forecasts a slowdown in U.S. economic growth to 0.6% this quarter, down from 2.4% at the end of last year. Columbus Mayor Andrew Ginther cautions that tariffs could drive up median home prices by $21,000, exacerbating affordability concerns.
While some officials claim tariffs will result in a one-time price adjustment, others warn that potential retaliation from other nations could fuel an inflationary spiral.
Source Name : Economic Times