As the trade policies of US President Donald Trump continue to evolve, April 2 has been marked as a crucial day in the administration’s economic agenda. Dubbed “Liberation Day” by Trump himself, the date is expected to usher in sweeping import tariffs designed to curb foreign reliance and bolster domestic industry. However, uncertainty shrouds the specifics of the plan, and experts warn of potentially significant economic ramifications.
The White House has also confirmed that an announcement on the tariffs will be made at 4 pm Eastern Time.
A move toward ‘reciprocal’ tariffs
Trump has long championed a protectionist trade stance, arguing that foreign nations impose unfair levies on American exports while enjoying preferential access to the US market. His latest proposal seeks to introduce reciprocal tariffs — duties mirroring those imposed by trading partners — to ‘ensure a level-playing field’.
On Monday, White House Press Secretary Karoline Leavitt confirmed that the president will unveil these tariffs on April 2, although the specifics remain unclear. Among the possibilities are product-specific levies or broader tariffs applied across all imports from a given nation. White House trade adviser Peter Navarro has suggested these tariffs could generate $600 billion annually, implying an average tax rate of 20%.
Trump has signalled his intent to target major economies including the European Union, South Korea, Brazil, and India.
The proposed tariffs come at a time of mounting concerns over inflation and global economic stability. While Trump argues that import duties will protect US industries, many economists caution that such measures could trigger price increases for consumers, disrupt supply chains, and invite retaliatory tariffs from affected nations.
Financial markets have already experienced volatility in response to previous tariff actions, with investor sentiment dampened by the uncertainty surrounding future trade relationships. Businesses, too, have faced disruptions, delaying hiring and investment plans amid concerns over rising costs.
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What are the key tariffs set to take effect?
Several of Trump’s tariffs are scheduled for implementation in the coming days and weeks:
- April 2: A 25% tariff will be imposed on imports from any country that purchases oil or gas from Venezuela, a move that could impact the US itself given ongoing energy imports from the South American nation.
- April 3: A 25% tariff on all auto imports will come into effect, beginning with fully assembled vehicles. Tariffs on auto parts will be phased in gradually, concluding on May 3.
- Previously delayed tariffs: Levies on imports from Canada and Mexico, originally postponed for a month, are set to expire in early April. The US-Mexico-Canada Agreement (USMCA) extension covering Mexican imports will lapse on April 2 unless further action is taken.
The administration projects that auto tariffs alone will generate $100 billion in revenue annually. However, industry analysts warn that these measures could severely disrupt global supply chains and increase vehicle prices for American consumers.
What are the existing tariffs?
Trump’s latest actions build upon a series of tariffs already in place:
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- China Tariffs: In February, a 10% tariff was imposed on all Chinese imports, which doubled to 20% in March. Beijing responded with retaliatory duties, including a 15% levy on US coal and liquefied natural gas, a 10% tariff on American crude oil, and up to 15% tariffs on key agricultural exports.
- Steel and Aluminium Tariffs: Effective since March 12, steel and aluminium imports are now subject to 25% tariffs, with exemptions removed and aluminium levies increased from 2018 levels.
- Canada and Mexico Tariffs: While some import taxes on auto-related goods have been delayed, others — such as a 10% tariff on Canadian energy products — remain in place. Canada has introduced countermeasures totalling billions of dollars, while Mexico has yet to impose new levies, signalling a possible effort to de-escalate tensions.
What has been the reaction to the tariff threat?
As the world awaits for the tariffs to kick in, the European Union has warned that the world’s biggest trade bloc “holds a lot of cards” when it comes to dealing with such levies. “Europe has not started this confrontation. We do not necessarily want to retaliate, but if it is necessary, we have a strong plan to retaliate and we will use it,” European Commission President Ursula von der Leyen told EU lawmakers.
“Europe holds a lot of cards, from trade to technology to the size of our market. But this strength is also built on our readiness to take firm counter measures if necessary. All instruments are on the table,” von der Leyen said, at a European Parliament session in Strasbourg, France.
Canada has vowed to respond with tariffs of its own. “We will not disadvantage Canadian producers and Canadian workers relative to American workers,” Prime Minister Mark Carney said in Winnipeg.
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Carney and Mexican President Claudia Sheinbaum spoke on Tuesday about Canada’s plan to “fight unjustified trade actions” by the US, the prime minister’s office said. “With challenging times ahead, Prime Minister Carney and President Sheinbaum emphasized the importance of safeguarding North American competitiveness while respecting the sovereignty of each nation,” Carney’s office said in a statement.
Trump has signalled his intent to target major economies including the European Union, South Korea, Brazil, and India via the tariffs. (Photo: AP)
Will it affect India?
It remains unclear whether the tariffs will affect India as New Delhi and Washington on Tuesday agreed to the Terms of Reference for the Bilateral Trade Agreement following an intervention from the Indian Prime Minister’s Office (PMO). The ToR outlines the framework of the BTA and typically requires clearance from the highest political office before negotiations begin. “The PMO is keen on a swift finalisation of the deal,” a senior government official told The Indian Express.
Trump, following the deal, said that India was willing to cut tariffs, hinting at possible relief for India from sweeping US levies. “I heard that India is going to be dropping its tariffs substantially. A lot of countries are going to drop their tariffs,” Trump said during a White House press briefing. However, the US President had also told reporters aboard Air Force One that “all countries” would face the new tariffs.
(With inputs from AP and Reuters)
