Trump's Liberation Day Annoucement Shakes Stock Markets
After days of teasing the issue, President Donald Trump unveiled a new round of sweeping tariffs on Wednesday. Speaking from the White House Rose Garden, Trump's announcement is a significant escalation of the burgeoning trade war. Here is what you need to know about the specifics of this announcement and how the U.S. stock market is responding to the news on Thursday.
Details of Tariffs
Calling the move a "declaration of economic independence," the president used his national emergency powers to roll out expansive duties on dozens of countries. With so many different tariffs on dozens of nations, it is difficult to summarize the major new policy. The short version is that the president levied tariffs of at least 10% on nearly all goods coming into the country with higher rates put on countries that have the greatest trade deficits.
Most economists reacted poorly to the news, saying that it will send prices soaring for American consumers, hurting an economy that is already struggling and grappling with inflation. This sentiment is already being expressed in real time in the stock markets.
China will now see goods coming into U.S. taxed at 34%. Meanwhile, the European Union (EU) will be hit with 20% on all its products sent to the U.S. The move is the largest jump in U.S. tariffs in almost a century, dating back to the Smoot-Hawley Act of 1930.
The Trump administration had been billing the announcement as "Liberation Day," hyping it up on social media and getting the attention of the world. However, the specifics of the rollout are leading to even more uncertainty with the tariff levels all over the board.
The specifics detail that 60 nations will be slapped with tariffs greater than 10%. The initial 10% tariff takes effect on Saturday, April 5. Any percentage above this baseline will take effect on Wednesday, April 9.
Trump also noted that the new tariffs will not be on top of the previous duties put on steel, aluminum, and vehicles. Additionally, the 25% duty on products coming from Mexico and Canada that are not in compliance with the United States-Mexico-Canada Agreement will remain until the White House is pleased that the issues surrounding fentanyl and the flow of illegal migrants have been sufficiently addressed. At that time, the tariffs for these two nations will then be in line with the trade decisions imposed on the rest of the world.
The tariffs are not likely to end with this latest announcement. Leaders in the Trump administration reportedly want to impose separate taxes on critical minerals, semiconductors, and pharmaceuticals later down the road.
Foreign Response to the Tariff Announcement
It did not take long after the Rose Garden event for foreign leaders to respond to the news. Mexican President Claudia Sheinbaum announced that she will roll out a new economic plan for her country on Thursday in direct response to the news out of the U.S. This plan will reportedly include strategies to guard Mexico's important automotive industry sector.
Several other nations have also been defiant in their resolve to hit back at the Trump tariffs. The International Chamber of Commerce said shortly after the Wednesday announcement that the U.S. tariffs are a "risk to the global trading system.”
Leaders such as Swiss Federation President Karin Keller-Sutter immediately posted on X that this group would work quickly to respond. Likewise, Canadian Prime Minister Mark Carney vowed that this country will fight the tariffs using counter measures levied against the U.S.
Wall Street Responds to Tariff News
Trump's critics pointed out that the timing of Wednesday's announcement happened just after the U.S. stock market closed for the day. U.S. stocks plunged in after-hours trading, signaling rough waters ahead for the major indexes. By the early evening hours, Dow futures had lost over 900 points, equating to a decline of 2.19%. S&P 500 futures lost 3.38% of their value while the futures for the tech-heavy Nasdaq 11 plunged 4.28%. There is virtually no industry left untouched by these losses.
The situation was not any better on Thursday morning when the markets officially opened for trading. Shares of golden child Apple plummeted almost 9% within the first 90 minutes of trading. Also within this time frame, Microsoft was down 3%, Amazon had lost 9%, Meta had slipped 8%, Google was hovering at about a 4% loss, and Tesla had slipped 7%.
As a whole, the Dow was down 1,570 points, or 3.7%, over the morning trading session. The S&P 500 fell by 4.36%, good enough for its lowest level since last September. Nasdaq was faring the worst, down 5.6% during the first half of the trading day. While the Dow and the S&P 500 are heading toward their worst trading day since 2022, the Nasdaq is on pace to see its biggest losses since the markets shut down for the COVID-19 pandemic in March of 2020.
The news was only slightly less disturbing in the global markets. Europe’s benchmark STOXX 600 index landed down 2.34% while Germany’s DAX index dropped 2.29%. Over in Asia, Japan’s Nikkei 225 index dipped 2.77% and Hong Kong’s Hang Seng index sank 1.52%.
Response from Democrats and Republicans
Not surprisingly, Democrats responded harshly to the news of the impending tariffs. House Minority Leader Hakeem Jeffries held a press conference and accused Republicans of bringing down the economy in real time and sending the country into a recession. The top-ranking House Democrat said that it was "Recession Day" rather than "Liberation Day."
Democratic Rep. Greg Meeks of New York said that he will force a vote over tariffs in the days ahead. Meeks is the highest-ranking party member on the House Foreign Affairs Committee, meaning that he can lean on the powers of a procedural maneuver to bypass leadership and force votes on the floor.
Meanwhile, four GOP senators crossed party lines on Wednesday to vote on a proposal intended to block Trump's proposed tariffs on Canadian goods. The bipartisan rebuke of Trump's trade policies was adopted by a vote of 51 to 48 with the support of Republican senators Rand Paul, Mitch McConnell, Lisa Murkowski, and Susan Collins.
Despite the support from four respected Republican lawmakers in the Senate, the vote is primarily symbolic. This is because Republicans in the House are not likely to attempt to push through any legislation surrounding Trump's tariff policy. This Senate measure has been coming up for a vote before Trump's major tariff announcement on Wednesday.
Did you find this content useful? Feel free to bookmark or to post to your timeline for reference later.