Trump’s ‘Liberation Day’ tariffs spark global trade fallout

Onome Amuge

President Donald Trump’s “Liberation Day” speech and the subsequent implementation of sweeping tariffs have ignited a firestorm of international condemnation, casting a shadow over global trade relations and sending shockwaves through financial markets. Despite the administration’s assertion of economic liberation for the US, the response from its trading partners has been one of anger and pledges of retaliation.

John Denton, secretary-general of the International Chamber of Commerce, described the move as a “watershed moment in American trade policy,” highlighting the uncertainty surrounding the long-term ramifications. Ian Bremmer, founder and president of Eurasia Group, was more direct, labeling the tariffs “incredibly stupid.”

The complex tariff regime, initially outlined as a baseline 10 percent levy on all imports effective April 5th, and higher tariffs for specific nations, faced a last-minute adjustment. 

On April 9th, Trump announced a “90-day pause” to the retaliatory tariffs, maintaining the 10% flat levy. However, he simultaneously escalated tariffs on Chinese goods to 125 percent, effective immediately.

Prior to this shift, significant tariffs were slated for major Asian manufacturing hubs, including 24 percent on Japanese goods, 46 percent on Vietnamese goods, and 32 percent on Taiwanese products. 

Meanwhile, China, facing an initial 54 percent tariff, which was then doubled to 104 percent, has announced plans for retaliatory tariffs of 84 percent on US imports. The European Union faces a 23 percent tariff, while select partners like the UK, Turkey, Australia, and Singapore will see a 10 percent levy. The previously announced 25 percent tariffs on imported automobiles have also taken effect.

The White House justified the measures as equivalent to half the total tariff burden imposed on the US by its trading partners, factoring in both monetary and non-monetary trade barriers. The Office of the United States Trade Representative released its methodology for calculating these tariffs, which aims to balance trade with each country.

Canada and Mexico, already subject to 25 percent tariffs on non-compliant goods, were spared additional levies. A 37-page executive order also outlined exemptions for sectors including metals, critical minerals, lumber, pharmaceuticals, and semiconductors. Crucially, sector-specific tariffs will not be compounded on top of country-specific ones.

US trading partners have expressed disappointment and are weighing their responses. European Commission President Ursula von der Leyden stated that the EU was “ready to respond,” while China vowed “resolute countermeasures.” Australian Prime Minister Anthony Albanese described the tariffs as lacking “logic” and uncharacteristic of a “friend.” While Japan and South Korea expressed disappointment, they have yet to announce specific retaliatory measures.

The UK remains hopeful of securing a trade deal with the US. Business and trade secretary Jonathan Reynolds informed parliament that ongoing talks are taking place and that a deal is considered “possible” and “favourable to both countries.” The government has also invited UK businesses to provide feedback on the tariffs’ impact to inform its response, emphasizing that tariffs are a “last resort.”

Despite the immediate uncertainty, analysts anticipate the tariffs will ultimately drive trade outside of the US. It has also been projected that the development is going to result in other countries looking to expand trade relationships with each other, highlighting potential for increased trade between Canada, Mexico, Europe, and China.