There is talk of the U.S. gaining up to $600 billion in extra revenue from tariffs. On Sunday Paul Navarro, Trump’s chief trade adviser, told Fox News that “Tariffs are going to raise about $600 billion a year, about $6 trillion over a 10-year period.” However one dresses this up, today’s Liberation Day, when sweeping tariffs are supposed to free American workers, might cause a stock market crash. Or maybe even a recession.
There is a further concern following on from what Navarro said this week. That is the specter of tariffs going on for a period of up to ten years. The way that the $6 trillion is quoted over this period leaves no room for error. Trump might only be president for not quite four of those years, but the insinuation is that these tariffs may long outlive the current U.S. president, making negotiations more difficult for many affected countries. It also shows that there is some hope among Trump’s inner circle of a continuation of Trump’s America First agenda in the future.
On Monday, Jim Farley, the CEO of Ford Motor Co. wrote a note to employees stating: “While Ford supports the president’s vision of building a stronger auto industry and manufacturing base in the United States, the situation is dynamic and the impact of the tariffs are likely to be significant across our industry – affecting automakers, suppliers, dealers and customers.”
Uncertainty awaits following today’s announcement. Could a potential drop in consumer confidence lead to a market crash?
Which Countries Will be Affected the Most by Tariffs?
In a story by Bloomberg this morning, several countries were singled out to receive special ‘reciprocal tariffs’. In the past the countries receiving the most attention from the Trump administration have included the European Union, Mexico, Canada, Japan, South Korea, Vietnam and India. China has already had 20% tariffs applied to its exports to the U.S. since March 4.
India and China have also been threatened with a secondary tariff of between 25% and 50% as they are both buyers of Russian crude oil. This heightened scrutiny of Russia’s exports is because the U.S. president is reported to be upset with Putin. Recent negotiations over Ukraine have not gone as well as Trump had hoped.
The Liberation Day Announcement
At 4.06 p.m. Eastern the White House opened its doors and President Donald Trump made his way to a crowded lawn outside the seat of the U.S. president. Many members of Congress and the Senate were in attendance. The White House’s official site called it the ‘Make America Wealthy Again Event’.
Trump started by talking about the American dream and how U.S. taxpayers had been “ripped off” for many years. He then went straight on to announce his plan to create reciprocal tariffs. Trump sees today as one of the most important events in the history of the United States.
“With today’s action we will finally be able to make America great again, greater than ever before,” Trump announced. “This will be the golden age for America.”
The president went on to explain how the United States has traditionally only charged between 2.5% and 2.8% on imports. This is in stark contrast to countries like Vietnam or India where 60% or more tariffs are applied to U.S. imports. Trump feels passionate about these “tremendous imbalances”.
His first announcement was that from midnight tonight there will be a 25% blanket tariff on all automobiles imported to the U.S. The announcement was greeted by cheers from the crowd. Auto workers from Michigan were among the crowd and added to the cheers.
Trump continued by giving more examples of the imbalances in tariffs. He quoted how in South Korea U.S. rice imports were charged tariffs of over 50%, the same was the case in China.
Howard Lutnick, U.S. Secretary of Commerce, brought a board where tariffs to the U.S. were listed. As well as reciprocal tariffs proposed by the White House. China stood at the top of the list, which wasn’t in any particular order. China charges 67% tariffs on U.S. goods. In return the U.S. will charge China 34%, the President announced.
With the European Union the tariff on U.S. goods is 39% so the EU will now be charged 20% in return.
Then came the turn of Vietnam. The U.S. is charged 90%, so Vietnam imports to the U.S. will now have 45% tariffs applied. Taiwan charges 64%, so the island state’s imports will now be charged 32%. Japan was next charging 46%, so it now faces 24% tariffs.
India was next, 52% is charged on U.S. imports, so from tonight tariffs will be applied at 26%. South Africa charges 60% so 30% is applied.
The rest of the announcement followed the same approach. The U.S. will apply 50% in reciprocal tariffs. The UK and Brazil were exceptions. The UK and Brazil both charge 10% on U.S. goods, so from tonight the U.S. will charge 10% on goods from the UK and Brazil.
It’s safe to say that from tomorrow minimum base line tariff of 10% will apply. Automotive was one exception.
Russia was mentioned by the president, however extra tariffs on countries buying Russian crude oil didn’t come up.
Today’s announcement came after markets had closed in New York. The S&P 500, Nasdaq and Dow Jones all showed signs of growth today. Amazon stock was up 2%, whilst Tesla closed over 5% up on yesterday to help pull up markets.
What About TikTok?
With all the talk focussing on tariffs today, one might be forgiven if the story about Amazon bidding to buy TikTok slipped one’s attention. The deal would not only involve ByteDance, but also the Chinese Communist Party. Neither of them wants to sell TikTok, let alone the algorithm behind the social media platform.
Trump might meet with JD Vance and other members of the administration this afternoon to discuss the ownership of TikTok. The deadline for a new buyer is the April 5.
Today Bloomberg reported how China has taken steps to restrict local companies from investing in the U.S. This latest restriction applies to corporate investment; however it will make it hard for Chinese companies looking to bypass tariffs. In 2023 China’s investment in the U.S. was only 2.8% of the total investments for the year. It is unlikely to have changed this year.
Whether one calls it Tariffs Day or Liberation Day is not important. Tomorrow’s reactions by capital markets will be the real test. The performance of the leading global stock exchanges will be tested further. Tariffs are to take effect immediately. Today’s announcement may still lead to a market crash. But perhaps not to a full recession.
Author: Andy Samu
#Tariffs #LiberationDay #TariffsDay #WhiteHouse #AmericaFirst #MarketCrash #Trump #TradeWar #TradeConflict #TikTok #Reciprocal
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
See Also:
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Would Donald Trump Strengthen Or Weaken The Chinese Yuan (CNY)? | Disruption Banking
Why Does Donald Trump Want A Weaker US Dollar? | Disruption Banking
Trump touting the American Economic Dream at Davos | Disruption Banking
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