Trump Escalates Trade War with 10% Tariffs on All Imports

President Donald Trump has unveiled sweeping new tariffs as part of his "Liberation Day" policy, signing an executive order that imposes a 10% baseline tariff on all imports, regardless of existing industry-specific duties.

Additionally, the administration is targeting around 60 countries with higher tariffs, citing trade deficits, currency manipulation, and restrictive trade barriers as justification.

Under this policy, reciprocal tariffs will be set at roughly half the rates foreign nations impose on US exports.

For example, China’s 67% tariff on US goods will be met with a 34% levy on Chinese imports.

Other major trade partners will face similar measures, including 20% on the EU, 46% on Vietnam, 24% on Japan, 26% on India, 32% on Taiwan and Indonesia, and 10% on Brazil.

These country-specific tariffs take effect 9 April, while the universal 10% import duty will be enforced starting 5 April.

Trump stated:

“This is not full reciprocal. This is kind reciprocal.”

Canada and Mexico, however, are temporarily exempt.

Trump said Wednesday afternoon during remarks from the White House Rose Garden:

“Foreign nations will finally be asked to pay for the privilege of access to our market, the biggest market in the world. We’re right now the biggest market in the world.”

He expressed:

“For years, hard-working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense. But now it’s our turn to prosper,” Trump said from the White House Rose Garden. “I blame former presidents and past leaders who weren’t doing their job. They let it happen — to an extent that nobody can even believe.”

Positioning the policy as a return to historic economic protectionism, Trump suggested that tariffs could ultimately replace the federal income tax:

“From 1789 to 1913, we were a tariff-backed nation. The United States was proportionately the wealthiest it has ever been. So wealthy, in fact, that in the 1880s, they established a commission to decide what they were going to do with the vast sums of money they were collecting.”

He added:

“Then, in 1913, for reasons unknown to mankind, they established the income tax so that citizens, rather than foreign countries, would start paying.”

While the US has set its terms, global markets are bracing for retaliation.

Mexican President Claudia Sheinbaum has already pledged countertariffs set for 3 April, while Canadian Prime Minister Mike Carney has signalled a willingness to ease trade restrictions—if the US does the same.

Market reactions are unfolding, and the world watches to see how this new trade era will take shape.

Trump Goes Into the Nitty Gritty of the Liberation Day Tariffs with a Chart

Trump framed the Liberation Day policy around the principle of reciprocal tariffs, stating that his administration is evaluating the tariffs imposed by foreign nations—particularly in key industries like agriculture.

Based on these assessments, the US will impose either half the equivalent tariff rate or a minimum of 10%, whichever is higher.

To illustrate this, Trump presented a chart outlining the policy’s impact.

The new tariffs include significant levies on major trading partners.

Notably, Israel will face a 17% tariff despite having cancelled its own tariffs just a day earlier.

Meanwhile, Trump made no mention of new tariffs on Canada or Mexico, despite previous trade tensions with both nations.

All Imported Cars Face 25% Tariff Under Trump’s Plan

To drive automobile manufacturing back to US soil, a 25% tariff on imported cars—first announced by Trump last week—takes effect at midnight.

The administration also confirmed that additional levies on auto parts will follow in May.

Beyond the blanket tariff, Trump outlined the criteria for assigning country-specific rates, signalling a broader strategy to reshape global trade in the auto industry:

“At midnight, we will impose a 25% tariff on all foreign-made automobiles. Starting tomorrow, the United States will implement reciprocal tariffs on other nations. For nations that treat us badly, we will calculate the value of all their tariffs, and we will charge them approximately half of what they are charging us. They won’t be reciprocal, but I could’ve done that.”

He continued:

“Jobs and factories will come roaring back into our country, and you see it happening already. We will supercharge our domestic industrial base, we will pry open foreign markets and break down foreign trade barriers.”

Trump Wants to Swap Federal Income Tax for Tariff Revenue

While campaigning in October 2024, Trump proposed eliminating the IRS and funding the federal government solely through trade tariffs.

According to accounting automation firm Dancing Numbers, this shift could save American taxpayers between $134,809 and $325,561 over their lifetimes—assuming wage-based taxes are also abolished at state and local levels.

Commerce Secretary Howard Lutnick, who took office in February, has backed the idea, advocating for an “External Revenue Service” to replace the IRS.

He argues that the government’s inability to balance its budget while continually demanding more from taxpayers is unsustainable.

Tariffs, he claims, would not only stabilise revenue but also protect American jobs and strengthen the economy.

Crypto Market Sent Tumbling After Trump’s Tariff Announcement

Stock and crypto markets have reacted negatively to the recent tariff announcement, with critics warning that increased tariffs will lead to higher prices, reduced consumer spending, and ultimately lower business growth and investment.

Goldman Sachs analysts raised their recession probability for the next year from 20% to 35% earlier this week.

Bitcoin, which had surged to $88,466 prior to the announcement, quickly dropped back to $83,939, and is currently at $83,832.47.

There had been speculation that Bitcoin’s price would mirror stock market trends once the tariffs were unveiled, but as the stock market enters after-hours trading, investors are pulling back their gains, causing Bitcoin’s brief rally to stall.

As of now, the cryptocurrency has seen a 1.58% drop in the past 24 hours, with its year-to-date growth falling to 10.18%.

Altcoins followed suit, with Ethereum slipping 3.52% to $1,826.47 and XRP down 2.49% to $2.05.

Tom Essaye, founder of Sevens Report Research, noted that markets had likely priced in tariffs between 15% and 20%.

The Trump administration had remained tight-lipped about the specifics until the announcement, with sources indicating that the president was still finalising details late Tuesday evening.

Is a Global Trade War Imminent or is it Already Here?

President Trump initiated the Liberation Day ceremony after traditional financial markets had closed, and the new tariffs would not take effect until midnight, making it challenging to immediately gauge their full impact.

Additionally, given the President’s history of shifting positions, there is uncertainty surrounding whether the tariffs will be delayed, revised, or even rescinded.

As global tensions rise, a key question remains: Is a worldwide trade war imminent or is it already here?