Trump Unleashes New Tariffs: "Liberation Day" or Trade War?

April 2, 2025: Ex-President of the U.S. Donald Trump has announced across-the-board new tariffs, to which he has already given the title "Liberation Day.". As per the new trade policy, a floor tariff of 10% on all foreign products will be implemented from April 5, 2025. The administration will also impose country-specific tariffs that are higher for countries that have been labeled as "worst offenders," including China (34%), the European Union (20%), and India (26%). There will also be a 25% tariff on cars imported from April 3, 2025.

President Trump contends that the tariffs are necessary to protect American workers, reduce trade deficits, and respond to non-tariff barriers erected by other nations. But the tariffs will raise the cost of imports for U.S. companies, which could pass through to consumers in the form of higher prices and inflation. Others have warned of recession risk from reduced consumer spending and retaliatory actions by other nations.

The action has been criticized by nations such as India, Canada, and the EU, which are considering countermeasures. The action marks a departure from the long-standing U.S. advocacy for free trade and has been feared to lead to an international trade war. Reactions in the markets have been varied, with companies expecting to see higher operating costs as well as supply chain disruptions.