President Donald Trump’s tariffs are a day away – and they will come into force earlier than some expected. That is, immediately, said the White House this Tuesday.
Although many details remain unknown, perhaps even for Trump himself, the announcement of the government’s “Liberation Day” trade policy should be the most aggressive tariff movement ever made by the most obsessed with tariffs in modern history. Trump will meet with his team on Tuesday and the rates he announced at a ceremony at Rose Garden at 9:00 pm (Continental Portugal Hour) will come into force “immediately,” White House Secretary Karoline Leavitt said at a press conference.
Trump has promised to aggressively apply US import rates as a global solution to almost every problem. And the president has fulfilled his promise – so much so that he is scaring investors, economists, CEOs and a growing segment of the population that fears that imports on imports do more harm than well.
But Trump’s tariff efforts so far can be insignificant compared to what is about to come.
Trump told reporters on Monday that he had “decided” a plan to impose new tariffs to announce mid-week, by surprise some White House employees: if the president had indeed reached a final decision on the tariffs, it had not yet been widely shared inside the building.
It is not yet clear if Trump plans to apply individual rates to all US business partners; Apply fees to only a few countries; or apply a universal rate – perhaps up to 20% – to all imports. Trump’s advisers publicly support Trump’s tariff agenda, but behind the scenes, they differ in approach and the scope.
A 20% universal tariff – combined with the total retaliation of other nations about American products – would be the “worst scenario” for the US economy, Moody’s Analytics chief economist Mark Zandi tells CNN.
Economic destruction
A moody’s simulation concluded that such a climb in the trade war would eliminate 5.5 million jobs, would raise the unemployment rate to 7% and cause US GDP to fall 1.7% between the highest and lowest point.
“If this happens, we will have a serious recession. It is a destruction for the economy,” Zandi continues, adding that he thinks Trump will announce a less extreme tariff regime to avoid such damage.
Regardless of what Trump will announce, all proposals will probably be historical.
“We have never seen anything like this. It’s unprecedented and radical,” says Erica York, Tax Foundation’s vice president of federal fiscal policy, a right-wing reflection group.
Although previous presidents have applied tariffs on steel, tires, electric vehicles or other goods, York stresses that these actions are not “close” than Trump is preparing for Wednesday.
Trump’s Liberation Day announcement can be done in many ways. One idea is that reciprocal tariffs would start first with the “Dirty 15”, or the 15% of the nations with which the United States have the largest commercial deficits. This idea, suggested by the Treasury Secretary Scott Bessent, would represent a massive escalation in the trade war.
However, the crucial details of the ad remain poorly clear, including the level of customs rates and the products to which they will apply.
Tariffs on all 3.3 billion of imports of imports?
Instead, Trump insisted on customs rights to the “15 dirty”, supporting something much wider.
“We would start with all countries, so let’s see what happens,” Trump said on Sunday. “I didn’t hear a rumor about 15 countries, 10 or 15.”
This suggests that Trump’s Liberation Day rates will not be reciprocal but universal, reliving a campaign promise (which alarmed economists) of putting tariffs on all imports of all nations.
In other words, tariffs would be applied to about 3.3 billion of dollars of imported goods, according to federal trade data last year.
This is far from what Trump did during his first term.
During the first four years at the White House, Trump has applied tariffs about about $ 380 billion of imports, according to Tax Foundation.
Not seen a trade war like this since McKinley
This round of tariffs would be almost 10 times larger than that applied in Trump’s first term, evoking President William McKinley’s protectionist policy, who increased imports on imports to about 50% in the 1890s.
And Trump’s customs rights would come together to the very aggressive measures that he has already adopted in this term.
Since taking office in January, Trump has increased by China’s rates by 20%, imposed 25%limited rates on Canada and Mexico and increased tariffs on steel and aluminum to 25%.
Trump 2.0 tariffs affect more than $ 1 billion of imports, more than double than throughout its first term, according to Tax Foundation. This value could increase to $ 1.4 billion in the coming days if exemptions to Canada and Mexico expire.
So far, at least Trump has not been intimidated by the growing concern of Main Street and Wall Street with his tariff strategy.
Consumer confidence fell, fears of unemployment increased, and expectations of inflation have risen to maximums of several decades.
“It’s natural for people expect higher prices because we haven’t seen a trade war like this since McKinley,” says Art Hogan, B. Riley Wealth Management’s chief stratega.
Fears of recession and stagflation
On the eve of Liberation Day, US actions registered a strong drop, with investors trying to understand the confusing implementation of the commercial plan.
“Tariff uncertainty has put an unexpected strangulation in the markets,” wrote Anthony Saglimbene, amended market strategist at Ameriprise, in a report on Monday.
Wall Street is increasingly concerned that Trump’s trade plan undermines the US economy, potentially ending the economic expansion that began in 2020 after the collapse of the Covid-19 pandemic.
“President Donald Trump wants a recession? Will he have one to continue his chaotic tariff policies,” wrote Ed Yardeni, president of the Yardeni Research Investment Strategy Company, in a Monday’s report. “It’s really a pity that Trump is so willing to bring a demolition ball to the economy.”
Yardeni increased its probabilities of a stagflation scenario – higher inflation and a possible “superficial” recession – to 45%, against 35%.
Although Trump praised the fares during the election campaign, investors and economists were caught by surprise with the seriousness with which he applies them. Many had discarded their tariff promises as a bluff or a trading tactic.
For the second time in less than a month, Goldman Sachs has increased their fare forecasts. The Wall Street Bank now sees 35% of a US recession in the next 12 months, against 20% previously.
The White House has rejected concerns about economic and short -term market turbulence, arguing that Trump’s efforts will be compensated in the long run.
“The president will announce a tariff plan that will reverse the unfair business practices that have been harming our country for decades. He is doing this in the best interest of the American worker,” White House press secretary Karoline Leavitt said to journalists on Monday.
Of course, Trump imposed rates during his first term and the US economy was not stagfilled or recession (though weakened with the pandemic).
But today’s world is very different. Inflation is much higher, such as interest rates. Central banks, investors and consumers are much more sensitive to price variations.
And what Trump is doing is much more aggressive.
“I wouldn’t surprise me if the ordinary citizen didn’t realize the rates during Trump’s first term in his daily life,” says York, the tax Foundation executive. “But what we are talking about now would be so comprehensive that it would be impossible not to give for it.”
Truly ridiculous
Some companies are already noticing the impact and are frustrated with all this chaos.
“Trump, tariffs, massive uncertainty – how is it possible to make business planning with all this uncertainty and daily management changes made by the Trump administration?” Asked a computer manufacturer and electronics to the Dallas Federal Reserve bank in an inquiry released on Monday.
A mineral product manufacturer has also complained about the interrogation points surrounding the economy.
“Tariffs! We have to make decisions, but the ball is always moving. This is truly ridiculous,” wrote the transformative industry executive. “I’ve been in business for 50 years, starting next year, and I’ve never seen so much uncertainty in the market.”
York fears that the only “positive side” of universal tariffs is the fact that people realize how dangerous rates can be. Compare it to a child who touches a stove and quickly finds that he is very hot.
“Let’s learn a very difficult lesson very quickly and may not make the same mistake again,” reiterates York.
Legitimate concerns
Leavitt acknowledged on Tuesday that US consumer concerns are understandable, but appealed to patience for the president’s economic plan to work.
“Well, they are certainly legitimate concerns, and the president takes these concerns very seriously, and is approaching them every day,” Leavitt said.
“Tomorrow’s announcement is to protect future generations,” said the spokesman. “It’s for your children and grandchildren, to ensure that there are jobs here in the United States of America so your children can live the American dream.”
Leavitt also said that Trump’s plans for tax cuts and deregulation will help reduce inflation, perhaps by neutralizing the effect of tariffs. Economists, however, have released doubts about this statement. In a recent note, Goldman Sachs analysts stated that economic growth driven by Trump’s fiscal policies would not be able to compensate for the damage caused by his massive tariff plan.
Leavitt encouraged comparison with Trump’s first term, when the stock market reached historical maximums.
“He is working on the implementation of this economic formula every day, lowering inflation, lowering energy prices, making massive deregulation efforts and simultaneously implementing fees effectively, and tomorrow will know more about this announcement,” Leavitt reiterated.
Asked by Fox News Peter Doocy, if the White House could change strategy if its tariff plan failed, Leavitt rejected the issue.
“They won’t be wrong,” Leavitt said. “It will work, and the president has a brilliant team of counselors who have been studying these issues for decades, and we are focused on restoring America’s Golden Age and making America an industrial superpower.”
Kevin Liptak and CNN Elisabeth Buchwald contributed to this report
