President Donald Trump’s forthcoming “Liberation Day” announcement on April 2 has intensified concerns about escalating trade tensions, with reciprocal tariffs targeting nearly all U.S. trading partners now on the table. The move, framed as a strategy to counter “unjust trade practices,” risks disrupting global supply chains and amplifying inflationary pressures.
Trump’s administration has signalled a broad-based approach, with reciprocal tariffs potentially averaging 15% across all nations, according to Goldman Sachs analysts. While specifics remain unclear, the White House has hinted at mirroring foreign tariffs dollar-for-dollar, citing examples like Canada’s 250% duty on U.S. dairy products—though such extreme rates often apply to minimal imports.
Recent shifts in rhetoric have heightened uncertainty, with Trump reversing course after initially suggesting exemptions for select countries, declaring tariffs would “start with all countries.” This volatility has rattled markets, with the S&P 500 and Dow Jones declining 2.4% and 1.4%, respectively, in the days leading up to the announcement.
A 25% tariff on foreign-made vehicles—effective April 3—has already drawn criticism. Analysts warn the measure will raise prices for imported cars and disrupt U.S. automakers reliant on foreign parts.
The administration has expanded earlier measures, including 25% steel and aluminium tariffs and 10% duties on Chinese goods. China retaliated with tariffs on U.S. coal, crude oil, and agricultural exports. Canada and Mexico, meanwhile, face delayed auto-related tariffs tied to the USMCA agreement.
Economists caution that widespread tariffs could raise consumer prices, strain corporate margins, and invite retaliatory actions. The White House projects $100 billion annually from auto tariffs alone, but analysts warn of long-term damage to global trade frameworks.
While not directly tied to tariffs, Friday’s March jobs report will test the resilience of the U.S. labour market amid slowing growth. Economists expect 135,000 jobs added, down from February’s 151,000, with unemployment steady at 4.1%. Corporate guidance has turned cautious, with 68 S&P 500 firms issuing negative earnings outlooks—above historical averages.
European officials have condemned the auto tariffs as a threat to transatlantic economic ties. India, Brazil, and South Korea are also bracing for potential levies. The EU, long a target of Trump’s criticism, faces heightened risks given its reliance on U.S. markets.
Trump’s team has framed tariffs as a bargaining tool, citing past examples like Canada and Mexico, where steep duties were later rescinded. However, the administration’s inconsistent messaging and emphasis on country-based tariffs suggest a more entrenched approach.