Wednesday, April 2, 2025

Trump claims American industry ‘reborn’ as he imposes tariffs

Donald Trump has announced an across-the-board tax on all imported goods purchased by Americans and additional taxes on imports from countries that officials deem to be placing unfair barriers on the importation or sale of American goods.

The president unveiled the measures on what he called “Liberation Day,” in an effort to forcibly undo decades of globalization and reindustrialize a U.S. economy that has become increasingly dominated by services and knowledge-based work in recent years.

Speaking at a long-anticipated event in the White House Rose Garden, Trump said Wednesday would “forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again.”

After a series of whipsaw days in the market, ever since Trump began his saber rattling about tariffs on Mexico, Canada and just about any other country, making the announcement after markets closed made sense to prevent a large market sell-off or a decline in stocks.

He announced that starting at midnight, Americans will at minimum pay what he called a 10 percent “baseline tariff” on all imports “to help rebuild our economy and to prevent cheating.”

But Trump went further by announcing how Americans would, starting in just a few days, face the effects of his administration imposing 54 percent taxes on all Chinese imports (a new 34 percent tax plus the 20 percent tax that is already in place), 20 percent on all imports from European Union countries, 32 percent on imports from Vietnam, 24 percent on imports from Japan, using what White House officials described as a formula that bases the tax rates on America’s trade deficits.

He also claimed that “foreign nations” would “finally be asked to pay for the privilege of access to our market, the biggest market in the world,” even though foreign countries do not pay tariffs because tariffs are taxes paid by American importers and often passed on to consumers in the form of higher prices.

It’s unclear whether Trump, a billionaire whose administration is staffed with some of the wealthiest people in the United States, understands the pain his administration’s policies could impose on voters who elected him to bring prices down, though he did say Americans might “have to go through a little tough love” as a result of the new tariffs.

Nearly every major metric by which to measure the economy shows that not only would the tariffs fall onto the consumer, but that it could also lead to a word economists dread: stagflation, wherein prices rise while unemployment also spikes.

The White House has insisted that this would not be inflationary. But the Atlanta Federal Reserve’s GDPNow model projected that gross domestic product would contract by 3.7 percent, which is lower than it was last week. The Institute for Supply Management reported on Tuesday that economic activity contracted in March.

But markets and the Federal Reserve are not the only group becoming nervous about this. Even a handful of Republican senators are revolting against the tariffs. Sen. Rand Paul, an idiosyncratic libertarian Republican from Kentucky, teamed up with Sen. Tim Kaine, a Democrat from Virginia, to repeal Trump’s tariffs with Canada.

Read more here. 

By Eric Garcia and Andrew Feinberg

Reading list

Daily briefing

Trump’s ‘liberation day’ of tariffs is here. What does it mean for U.S. consumers?

Sweeping tariffs will hit the U.S.’s largest trading partners outside of North America, Ariana Baio reports.

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QUOTE OF THE DAY

The country deserves – and we will take – a calm, pragmatic approach

British Prime Minister Keir Starmer in response to Trump's tariff announcement. 

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