Topline
In just more than a week, President Donald Trump will roll out what he’s indicated is his biggest trade policy yet, reciprocal tariffs, naming next Wednesday as “Liberation Day” for American trade, though Trump has sowed confusion on what countries and goods will be included, and he gave further indication Monday his upcoming tariffs may be less impactful than he previously expressed.
President Donald Trump is joined by Commerce Secretary Howard Lutnick last month.
Key Facts
“April 2nd is Liberation Day in America,” Trump wrote last week, referring to what he previously described as the “BIG ONE,” reciprocal tariffs.
After heavily teasing reciprocal tariffs in February, Trump pushed back the implementation of those levies to at least April 1, the date he ordered the Commerce and Treasury departments to complete studies on what the policies may look like in practice.
But Trump said to reporters Friday he shifted the “Liberation Day” reciprocal tariff date from April 1 to April 2 because he “didn’t want [it] to be April Fool’s Day because then nobody would believe what I said.”
Trump further muddied the waters in that Friday press conference when he said there will be “flexibility” on his tariffs, while The Wall Street Journal reported Sunday Trump won’t announce April 2 actions on hot-button sectors like semiconductor chips and cars as he’s previously indicated.
Though Trump insists he desires to upend the global trade status quo and directly match the equivalent tariff placed on American goods in a given country—“we’ve been ripped off by every country in the world, friend and foe,” Trump said Friday—his top economic official, Treasury Secretary Scott Bessent, indicated last week the biggest development coming April 2 will be the White House will send a “number that we believe that represents their tariffs” to all trade partners.
April 2 is also the date when exemptions on goods from Trump’s 25% tariffs on imports from Canada and Mexico, the U.S.’ biggest trade partners, are due to expire.
Liberation Day May Be First Phase Of Two-Pronged Plan
Trump’s waffling on reciprocal tariffs may be a result of his administration seeking strong legal footing for such expansive actions and take a two-phased approach, suggested a Tuesday report in the Financial Times. U.S. Trade Representative Jamieson Greer supports initiating formal probes into trade partners, a process which could last up to six months, before slapping further tariffs, according to the publication. Trump could announce tariffs on car imports April 2, multiple sources told the Financial Times.
News Peg
In a Monday afternoon appearance at the White House, Trump called April 2 a “big day,” but expressed further flexibility in his tariff plans. The president said he “may give a lot of countries breaks” and his plans are “reciprocal, but we may be even nicer than that,” signaling the U.S. may not even match the tariff rates American goods face abroad.
Big Number
2.5 million. That’s how many individual tariff rates would be required in a good-by-good, country-by-country reciprocal tariff plan, UBS economists led by Jonathan Pingle wrote in a Friday note to clients, making it appear unlikely at this point the Trump administration will be able to turn around such a policy by next week.
Crucial Quote
“Presumably something is going to happen,” but “the hard part is trying to figure out what precisely that might be,” shrugged the UBS economists.
Investors Buy Notion Of Less Severe Tariffs
Stocks surged Monday in a rally largely tied to optimism that the April 2 tariffs won’t be quite as impactful as previously thought. The S&P 500 surged nearly 2% to its highest level since March 7. Leading the rally were shares of some of the companies thought to be hardest hit by the most extreme tariff scenario, including Elon Musk’s electric car company Tesla and artificial intelligence chip designer Nvidia.
Key Background
Tesla is among the U.S.-based multinational firms to caution the Trump administration against the adverse effects of new tariffs in slowing the business of American firms abroad, opposition which was particularly notable considering Musk’s role as perhaps the most powerful person in the White House other than Trump. Even after Monday’s bounce, stocks have tanked as Trump has reshaped trade policy, and the S&P is trading 6% below its Feb. 19 record. Though reciprocal tariffs have the potential to be the most impactful import tax, Trump has already enacted several tariffs, including a 25% levy on steel and aluminum and an additional 20% duty on Chinese goods. Perhaps the most significant fallout of the tariffs is inflation, as economists largely agree importers will pass on the levies to consumers via higher prices, at least in the near term.