Can you believe it has only been one month since US President Donald Trump stood in the Rose Garden of the White House and announced those sweeping and savage 'reciprocal tariffs' that upended global markets?
In many ways, it feels like an eternity ago. But 'Liberation Day' was exactly one month ago today.
As you may remember, Trump had embarked upon his tariff crusade before 2 April. There was the 25% tariff hike on Mexican and Canadian imports that was subsequently recast. The 25% tariffs on imported cars, aluminium, and steel into the United States. Not to mention the initial 10% hike on Chinese imports.
But it was the reciprocal tariffs from 2 April that really set the cat amongst the pigeons. In the Rose Garden, Trump announced that almost every country on earth was ripping off the United States. Using a rather arbitrary formula to come up with different tariff rates, Trump revealed a range of new taxes on imports. These ranged from a 10% baseline tariff applied to countries like Australia and the United Kingdom, to rates as high as 50% for Lesotho.
The Trump tariff rollercoaster
Well, those only lasted a week. On 9 April, Trump backed down in the face of a fierce backlash from both the stock market and the bond market. A 10% baseline tariff would remain in place on all imports entering the United States, as well as on aluminium, steel, and cars. But those higher reciprocal tariffs would be delayed by 90 days.
That was with the notable exception of China. Trump initially imposed a 34% tariff on Chinese imports. But when the country retaliated with its own tariffs, Trump responded in kind by increasing the American rate. In what became a somewhat farcical game of chicken, both countries continued to ramp up their tariff rates until the US hit 145% on Chinese imports and China 125% on American imports. That is where they remain today.
So, apart from what is effectively a mutual trade embargo between the USA and China right now, where do Trump's tariffs stand today?
What's next for tariffs?
Well, we're all waiting with bated breath to see what will come at the end of the current 90-day tariff pause. Considering the initial reaction from the American stock market and the subsequent rebound, it seems that investors are assuming that Trump's Liberation Day reciprocal tariffs might never be implemented.
However, no such indication is coming out of the White House. Trump and his administration have made remarks about countries calling up, willing to negotiate on apparent bended knees. They have also indicated that deals are coming, although we have yet to see any deals with any country. Perhaps they will be announced before the 90-day deadline expires in July.
Trump has made other policy changes, though. Subsequently, it was revealed that the steep 145% China tariff wouldn't apply to smartphones, computers, and other select electronics.
This week, Trump also announced that the initial 25% tariff on automotive vehicles would be softened. Automakers will now be eligible for tax credits up to 15% of domestically assembled vehicles, even if they use foreign-made parts. According to Reuters, though, this will only be in place for three years to allow car makers to 'onshore' their supply chains.
So that's the latest on the Trump tariff front. Given this administration's unpredictable nature, it's hard to anticipate what might happen next. Let's see if those reciprocal tariffs came back in July.
