President Donald Trump’s plan to impose new “reciprocal tariffs” on a wide range of countries has put global markets on high alert. The announcement, dubbed “Liberation Day” by Trump, is set to take place on April 2, 2025. The S&P 500 has already ended its worst quarter since 2022, and consumer confidence has hit a 12-year low, reflecting the uncertainty and nervousness surrounding the potential economic impact of these tariffs.
Trump maintains that the tariffs will mirror those imposed on U.S. goods by other countries, but his rhetoric has softened, suggesting that the numbers may be lower than what other countries have been charging. Commerce Secretary Howard Lutnick stated that studies on “non-reciprocal” trade relationships are expected to be completed by April 1, giving Trump the option to impose tariffs starting April 2. White House press secretary Karoline Leavitt confirmed that the tariffs would be imposed “immediately.”
Experts are divided on the effectiveness of Trump’s broad-brush approach.
Doug Irwin, professor of economics at Dartmouth College, noted that targeting specific countries or goods might be more effective. John Veroneau, a former deputy U.S. Trade Representative, agreed, stating that a more surgical approach would be better suited to address specific trade barriers that U.S. exporters complain about.
Markets uneasy ahead of new tariffs
The global reactions to these tariffs could be significant. An Aston University Business School study estimates that the total global cost could reach $1.4 trillion as trade patterns shift and prices increase. In the UK, the economy could shrink by 1%, potentially erasing growth and leading to increased pressure for tax hikes or spending cuts.
The broader geopolitical implications are also significant. Should the U.S. administration alienate its allies, countries like China could step in to fill the void, offering cheaper goods to markets such as the UK. This situation could fundamentally reshape not only America’s trade policies but the global economic order.
As the world awaits Trump’s announcement, the stakes are high, and the market’s reaction has been adverse. It remains to be seen how effective Trump’s “Liberation Day” tariffs will be and what their long-term impact on the U.S. and global economy will be.
