Donald Trump is calling it Liberation Day. The president claims prospective tariffs on trillions of dollars of U.S. imports, which he is preparing to reveal on Wednesday, will mark the moment that global trading partners stop taking advantage of the United States.
In fact, the decision could kick off a series of retaliations and negotiations which will drag on for years. Trump’s devotion to using tariffs to attack a vast array of American woes and foes means trade uncertainty is here to stay.
The tariffs, designed to counter supposed trade imbalances with other countries, are part of a barrage of measures Trump has set in motion since taking office in January.
RELATED: Could Kamala Harris beat Donald Trump in November’s presidential race?
His administration is also exploring restrictions on trade in products from pharmaceuticals to semiconductors, similar to the 25% levy on imports of cars and parts, opens new tab announced last week.
Meanwhile, a recent threat to punish countries that buy Venezuelan oil, opens new tab shows Trump sees trade duties as a multi-purpose weapon he can aim at almost any target.
Start with the reciprocal tariffs. The idea of the U.S. matching the higher rates that other countries charge on its exports seems simple. In reality, it’s complicated.
The U.S. tariff schedule, opens new tab has around 12,500 separate entries and applies to trade with almost 200 countries.
That means millions of bilateral relationships, each of which in theory requires a bespoke reciprocal tariff.
Apart from the complexity, this approach would probably not have much impact. UBS economists calculate that if the U.S. raised levies to the same level charged by other countries, its trade-weighted average tariff would rise by just 1.65 percentage points:
In 2023, the overall figure, opens new tab was 2.2%, according to the World Trade Organization.
The White House is irked by more than unfair tariffs, though. It has pointed, opens new tab to a long list of factors it claims impede the flow of American goods to other countries,
from government subsidies to sanitary measures and even value added taxes. Factoring these into reciprocal charges allows the administration to justify almost any levy.
How all this will work is still far from clear, though. One option is to whack each country with a blanket charge on all outbound trade with the U.S.
Last week the country’s Treasury Secretary Scott Bessent told Fox Business, opens new tab the administration was focused on the “Dirty 15” worst offenders – a list that probably includes Canada, China, the European Union, India, Japan, and Mexico, judging by a February filing, opens new tab from the U.S. Trade Representative.
RELATED: Donald Trump faces revised US indictment in election subversion case
Yet the policy remains in flux. Trump recently revived the idea of imposing a blanket 20% tariff on all the $3 trillion-plus of goods the U.S. imports each year, the Wall Street Journal reported, opens new tab.
That would take overall import duties back to their peak during the Great Depression of the 1930s.
White House aide Peter Navarro on Sunday claimed, opens new tab the tariffs would raise $6 trillion in revenue over a decade – a figure roughly consistent with a 20% charge.
However, this calculation makes no allowance for the likely drop in demand for imports resulting from the policy.
