trump's 'liberation day' tariffs spark global anxiety
Washington, Wednesday, 2 April 2025.
President Trump’s announcement of reciprocal tariffs has triggered widespread concern. These tariffs, which Trump calls ‘liberation day’, could initiate a $1.4 trillion trade war. Trump plans to match other countries’ tariff rates on U.S. imports, a move that breaks with decades of negotiated trade policy. Experts warn of potential global trade disruption, rising prices, and a heightened risk of recession. The tariffs target all countries, including the ‘dirty 15’ with the largest trade surplus with the U.S., raising fears of retaliatory measures and economic instability.
Market reaction and expert opinions
The announcement has already unsettled markets. Global stock markets experienced declines, with Japan’s Nikkei 225 falling 4%, South Korea’s Kospi dropping approximately 2.5%, and Hong Kong’s Hang Seng Index decreasing by 1.7% [7]. Australia’s ASX also closed 1.7% lower [7]. Wall Street had its worst quarter in almost three years amidst fears that the tariffs will lead to stagflation [6]. JPMorgan Chase’s chief economist, Bruce Kasman, estimates that the risk of a recession has risen to 40% due to these aggressive policies [7].
potential impact on inflation and trade
Economists predict the tariffs will push U.S. core inflation above 4% in the next quarter [7]. These tariffs could significantly alter trade dynamics, as the U.S. trade deficit reached $918 billion last year [2]. The USTR has also released its 2025 National Trade Estimates Report, highlighting digital trade barriers [8]. This report signals a focus on protecting U.S. technology firms by monitoring and addressing barriers to digital exports, such as data localization and discriminatory taxes [8]. These measures could further strain international trade relations.
administration’s stance and potential retaliation
Despite concerns, the Trump administration appears resolute. White House Press Secretary Karoline Leavitt stated that there would be ‘no exemptions at this time’ [6]. Trump himself has dismissed concerns about rising prices for automakers, suggesting consumers will shift to American-made cars [7]. However, experts like Alex Jacquez of Groundwork Collaborative, anticipate complications and potential retaliation from other countries [3]. The tariffs, while aiming for reciprocity, may disproportionately affect certain products and countries, leading to unpredictable outcomes [3].