"Liberation Day" Tariffs
Trump signed Executive Order 14257 on April 2, 2025, imposing a baseline 10 percent tariff on virtually all US imports effective April 5, plus individualized 'reciprocal' tariffs on dozens of named trading partners effective April 9, calculated using a formula critics -- including many economists -- said bore little relationship to actual foreign trade barriers and instead reflected each country's bilateral goods trade deficit with the United States. A companion order closed the de minimis exemption for low-value Chinese parcels. The announcement triggered an immediate global equity sell-off: US stock futures fell almost 4 percent within hours, and over the following two trading sessions the S&P 500 lost nearly 10 percent of its value, with the Nasdaq entering bear-market territory and long-dated Treasury yields spiking in a bond-market reaction that unsettled the administration more than the stock declines. Facing that bond-market pressure, Trump announced on April 9 a 90-day suspension of the country-specific rates -- reverting most trading partners to the 10 percent baseline -- while simultaneously escalating tariffs on Chinese goods to 145 percent in response to Beijing's retaliatory tariffs on US exports; the S&P 500 posted a 9.5 percent single-day gain, among its largest ever, on the reprieve. Over the following months the administration negotiated bilateral frameworks rather than maintaining the original blanket rates: a Geneva meeting in May 2025 produced a temporary US-China truce cutting tariffs to roughly 30 percent on Chinese goods with China cutting its retaliatory tariffs in turn, a deal with the United Kingdom retained the 10 percent baseline with carve-outs for autos and steel, and a framework with the European Union -- announced at Trump's Turnberry golf resort in Scotland in July 2025 and taking effect that September -- capped most EU goods at a 15 percent tariff, still far above pre-2025 levels but below the initially threatened 20-plus percent reciprocal rate. Japan, South Korea, and other partners struck broadly similar 15 percent frameworks. Economists at JPMorgan and the Tax Foundation estimated the resulting tariff regime, even after the rollbacks, represented the highest average US tariff rate in roughly a century, projected to raise consumer prices by close to 2 percentage points and to act as a persistent drag on US and global GDP growth through 2025 and into 2026, with effects compounded by retaliatory measures and the sustained uncertainty the on-again, off-again tariff announcements created for business investment.
- Year: 2025 CE
- Category: Economic
