Tariff News: Trump Announces ‘Liberation Day’ Tariffs
Previously announced auto tariffs are in effect as of April 3.
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Updated on April 3
Trump announces 10% baseline tariff, higher for some countries
Today, Trump announced new “reciprocal” tariffs on imports from all trading partners. The baseline across-the-board tariff is 10%, but certain trading partners will see higher rates. The 10% across-the-board tariff on all imports will go into effect after midnight on April 5. Additional targeted tariffs on specific trade partners will go into effect after midnight on April 9.
In a speech from the White House Rose Garden on Wednesday, Trump said the tariffs would be reciprocal on all countries. “Reciprocal, that means they do it to us, and we do it to them,” he said. “Very simple. Can’t get any simpler than that.”
It’s unclear how the additional tariff amounts were calculated, but Trump says they are based on the existing tariffs on U.S. imports. Retaliatory tariffs are expected from major trading partners.
The reciprocal tariffs will be added to existing tariffs on trading partners so China, for example, will face a 54% tariff as of April 9. But the tariffs won’t be applied to existing taxes on targeted goods and services such as energy, steel, aluminum and automobiles. No additional tariffs on Mexico and Canada were announced; as of Wednesday all products imported from Mexico and Canada face a 25% tax.
In his speech, Trump said the reciprocal tariffs will bring about a “golden age” for manufacturing in the U.S. He also claimed that the policies would create “trillions and trillions of dollars to reduce our taxes and pay down our national debt.”
Trump’s 25% tariff on all automobile imports went into effect after midnight on April 3. Before May 3, another 25% tariff will begin on imported auto parts. The Yale Budget Lab estimates that new car prices could increase by 13.5% on average for Americans, or about $6,400.
On Sunday, Trump told NBC’s “Meet the Press,” that he “couldn’t care less if they raise prices, because people are going to start buying American-made cars.”
What tariffs are now in effect?
April 3: 25% tariff on all automobile imports.
April 2: 25% tariffs on goods from Canada and Mexico that were previously exempted.
March 12: 25% tariffs on all steel and aluminum tariffs.
March 4: 25% tariffs on some goods from Canada and Mexico; certain goods that are included in the U.S.-Mexico-Canada Agreement (USMCA) were exempt until April 2.
March 3: 10% additional tariff on China.
Feb. 4: 10% tariff on China.
Upcoming tariffs:
April 9: Additional higher reciprocal tariffs for specific countries.
April 5: 10% across-the-board reciprocal tariffs on all foreign imports.
Before May 3: 25% tariff on auto parts imports.
Trump announces auto tariffs
On March 26, President Donald Trump announced he would add a 25% tariff on finished cars that are imported into the United States, to go into effect on April 3. An additional 25% tariff on auto parts would go into effect “no later than May 3,” according to Trump’s executive order.
The tariffs will include American brands that are assembled in other countries. According to the New York Times, almost half of all vehicles sold in the U.S. are imported. Top suppliers of imported cars are, in descending order, Mexico, Japan, South Korea, Canada and Germany.
Trump previously added 25% tariffs on Mexico and Canada, but suspended parts of those tariffs, including autos. That suspension is set to expire in April.
Earlier in the week, Trump announced plans to add a 25% tariff on all countries that import oil from Venezuela. It’s worth noting that the U.S. is a top buyer of oil from Venezuela.
Trump’s Steel and Aluminum Tariffs Begin, EU and Canada Retaliate
On March 12, Trump’s new 25% tariffs on all steel and aluminum imports went into effect, which prompted swift retaliation from the European Union and Canada.
The top importers of steel to the U.S. include Canada, Mexico, Brazil, South Korea, Japan, Germany, China, Taiwan, Vietnam and Algeria, according to the International Trade Administration.
The European Commission is responding with measures of its own. It says that since the U.S. tariffs on imports from the EU are worth $28 billion, the U.S. will face tariffs worth the same amount for its exports to member countries.
The European Union retaliated quickly with what it called a two-step approach:
The suspension of existing 2018 and 2020 countermeasures against the U.S. will end on April 1.
There will be a package of new tariffs on U.S. exports that will begin mid-April.
President of the European Commission Ursula von der Leyen said in a statement, “We firmly believe that in a world fraught with geopolitical and economic uncertainties, it is not in our common interest to burden our economies with tariffs. We are ready to engage in meaningful dialogue.”
On March 12, Canada also responded with 25% retaliatory tariffs on C$29.8 billion ($20 billion) worth of imported U.S. goods. The tariffs will include steel and aluminum, as well as products like computers, sports equipment and cast iron products, according to Canada’s Finance Minister Dominic LeBlanc. The new import tariffs began on March 13.
On March 13, Trump posted on Truth Social that he may levy a 200% tariff on alcohol coming from the EU. He said it was in response to the EU’s new 50% tariff on whiskey for U.S. imports. “ This will be great for the Wine and Champagne businesses in the U.S.,” Trump wrote.
The response from the EU and Canada arrives on the heels of a preemptive retaliation by the Canadian province of Ontario, which announced it would add a 25% surcharge on electricity imports to the U.S. Then, on March 11, Trump announced he would double the steel and aluminum tariffs on Canada to 50%. However, Ontario announced it would suspend the surcharge following a phone call with U.S. Secretary of Commerce Howard Lutnick. Trump then called off the added tariff.
During Trump’s first presidency, he imposed a 25% tariff on aluminum and a 10% tariff on steel from Canada, Mexico and the European Union. The tariffs continued under Biden. Trump’s new policy increases the steel tariff from 10% to 25% and reinstates the 25% tariff on aluminum. Trump also said that no countries are excluded from these tariffs.
An analysis of those previous tariffs by the Tax Foundation found foreign exporters largely passed the cost of the tariffs to U.S. companies. The industries that were most impacted by the aluminum and steel tariffs included transportation, construction and packaging industries, according to the analysis.
Trump Delays Some Mexico, Canada Tariffs Until April 2
On March 6, Trump paused new tariffs on Mexican and Canadian imports included in the 2020 free trade deal, known as the United States-Mexico-Canada Agreement. The pause will be in effect until April 2.
The 25% tariffs on Canada and Mexico went into effect on March 4. An additional 10% tariff has also been levied on Chinese goods, bringing the total added tariff to 20% — those remain in effect.
A White House official told CNBC that some 50% of Mexican imports and 38% of Canadian imports are covered by the trade agreement.
Beyond the delay of the tariffs on Canada and Mexico, the only exemption is a one-month reprieve for automakers on related import purchases.
Trump has long said the tariffs are punitive, meant to curb drug trafficking into the United States. He has also claimed they’re meant to entice companies to bring more manufacturing back to the U.S. Following the official start to the tariffs, Trump posted on Truth Social, “If companies move to the United States, there are no tariffs!!!”
Trade partners retaliate
China retaliated with tariffs on agricultural imports from the U.S. That includes 15% tariffs on chicken, wheat, corn and cotton imports. There will also be 10% tariffs on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products. Those tariffs went into effect on Monday.
Canada has announced retaliatory 25% tariffs on C$155 billion ($107 billion) of U.S. products. Tariffs on C$30 billion of U.S. goods began on Tuesday and the remaining tariffs on an additional C$125 billion are expected to begin 21 days later. Trudeau has said that, for now, Canada will not be removing its tariffs on the U.S.
Mexico President Claudia Sheinbaum originally said that Mexico will announce its own retaliatory tariffs on March 9, but any announcement will likely be delayed until Trump’s pause ends.
How did we get here?
Mexico, Canada and China are the three top trading partners for the U.S. Both Mexico and Canada are more dependent on the U.S. than vice versa, which means the economic impact could be greater to those two countries than to the U.S. China, meanwhile, has the largest share of trading in the world.
On Jan. 31, Trump first announced new tariffs including a 10% tariff on China and a 25% tariff on all goods imported to the U.S. from Mexico and Canada with one exception: Oil from Canada would face a 10% tariff. On Feb. 3, leaders from Canada and Mexico negotiated a one-month delay of the tariffs by promising to beef up border patrol efforts.
But on Feb. 4 the initial 10% tariff on China still went into effect. China responded with retaliatory tariffs ranging from 10% to 15% on a specific set of energy products, cars and agricultural machinery. These tariffs went into effect on Feb. 10.
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Then on Feb. 7, Trump suspended tariffs on small packages from China. Prior to the announcement, the United States Postal Service USPS, in order to comply with the sweeping 10% tariff, briefly stopped accepting any packages from China. All packages from China under $800 will be imported tariff-free to the U.S.
On Feb. 1, Canada announced retaliatory tariffs. But following a call with Trump days later, Canadian President Justin Trudeau said Canada’s tariff on the U.S. would also be pushed back by one month.
What happens next?
Retaliatory tariffs would increase prices on goods imported from the U.S. and could potentially lead to a trade war.
Estimates by Peterson Institute for International Economics (PIIE) show 25% tariffs on Mexico and Canada would slow growth and accelerate inflation. U.S. consumers would see prices rise on goods coming from those countries. Consumers would also see higher prices for goods manufactured in the U.S. that require supplies from those countries.
The Observatory of Economic Complexity (OEC) which supplies global trade data, says the chief products that Mexico exports to the U.S. are computers, cars, as well as motor vehicles, parts and accessories. The U.S. exports mainly refined petroleum, motor vehicle parts and accessories, as well as petroleum gas to Mexico.
Canada primarily exports crude petroleum, cars and petroleum gas to the U.S. Meanwhile, the U.S. mainly exports cars, refined petroleum and delivery trucks to Canada.
China exports a wide variety of products and supplies to the U.S. including telephones, computers, electric batteries, light fixtures and motor vehicle parts, and accessories. The U.S. mainly exports soybeans, cars, petroleum gas, integrated circuits and crude petroleum to China.
More tariffs are on the way
On March 4, Trump signaled that he was cooking up a new agriculture tariff. He posted on Truth Social, “To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!” Trump did not indicate what agricultural products could be impacted
Previous tariff news
(Photo by Justin Sullivan/Getty Images for Getty News Images)
