The Trump administration plans to impose fresh tariffs on April 2 on the day President Trump is known as “liberation day.” The announcement is considered the culmination of “America’s First Trade Policy,” an executive order signed by economists on the first day of his office, with the aim of revitalizing the US manufacturing industry.
Trump called the April 2nd tariff announcement “a big thing,” suggesting that plans could be farther away than import taxes that have already unleashed goods from other countries, such as the March 26th declaration. 25% tariff on vehicles and auto parts Imported to the US
“For decades, we have been fooled and abused by all countries in the world, both friends and enemies. Now it’s time for good old America to get some of that money and pay respect. Trump spoke about his April 2nd plan in a post about True Society earlier this month.
On April 2nd, Trump is scheduled to announce the administration’s plans for what is called mutual tariffs. We believe this is necessary to eliminate the imbalance in trade with countries that export more goods to the United States than they import from the United States. However, adding broad tariffs to numerous imports could bolster a global trade war that could raise prices for US consumers and juice inflation, at least in the short term.
“Taxes are taxes on imports, and research shows that the majority are handed over to consumers,” Colin Grabou, associate director of Herbert A. Stiffel Center for Trade Policy Research at the Cato Institute, a libertarian think tank, told CBS Money Watch.
Ultimately, the Trump administration’s goal is to raise the prices of imports, and it says it will be economically advantageous for businesses to move manufacturing to the US.
“If prices don’t rise, there’s no reason to set up stores in the US as they won’t block imports,” Gravaux explained. “Some of the logic assumes prices will rise, otherwise they won’t be going to achieve their goals.”
Economists say Trump’s tariff agenda, which includes the uncertainty surrounding it, could lower US GDP by suppressing financial markets and consumer sentiment.
“The main channel to GDP due to trade policy uncertainty is through business investment. Higher trade policy uncertainty leads to more uncertainty in future revenue streams and increases the value of options that delay investment decisions until the situation becomes clearer.”
What tariffs will Trump announce on April 2nd?
Trump teased the April 2nd announcement on Wednesday, announcing a new 25% tariff on foreign-made cars and auto parts. “It’s the day of liberation. It’s the second day. It’s going to be mutual. I think people were impressed,” the president said.
Mutual tariffs are designed to compensate for import duties and other trade barriers imposed by other countries on US goods and services, according to Yale Budget Lab, a non-partisan public policy think tank. According to a White House memo on February 13, the US faces additional trade barriers, except for tariffs such as regulatory requirements that make American exports more difficult to reach other countries.
The size and scope of mutual tariffs Trump is expected to announce are unknown, but last week Treasury Secretary Scott Bescent said he would target countries with the administration’s mutual tariffs with the largest trade surplus and countries that have imposed the highest tariffs and non-tax trade bars on US goods.
Several countries operate large annual trade surpluses with the US, including the European Union’s Germany, Ireland, Italy, Vietnam, Japan and Taiwan. The US also has a massive trade deficit with China, but Trump said It’s already been imposed New tariffs in that country.
“In many cases it’s less than the tariffs they’ve been charging us for decades… I think we’re trying to make it a little more conservative,” Trump said on March 26.
Trump added that he would introduce mutual customs policies on “all countries.”
Meanwhile, additional tariffs are also scheduled to come into effect on April 2nd. 1 month delay in 25% customs duties Imports from Canada and Mexico are set to expire on that day. The 25% automobile fare announced by the president on March 26th is also expected to come into effect on April 2nd.
What are mutual tariffs?
Mutual tariffs enacted by the United States are consistent with foreign collections and other trade policies on American goods.
Mutual customs policies include calculating the country-specific numbers that the Trump administration considers to represent all trade barriers. However, non-customer import restrictions such as regulatory requirements can be difficult to quantify, economists say.
“There are many intangible assets, including the country’s testing regulations and the perception of openness to business with American companies,” Simon Macadam, Associate Chief Global Economist at Capital Economics, told CBS Moneywatch. “These are things that you can’t easily put numbers.”
Because of this complexity, some experts expect that Trump’s mutual tariffs could be more limited and may not be truly “mutual” as it may not exactly match taxes in other countries.
“Don’t be surprised if some things are rolled back, or because it takes a lot of time to materially perform calculations and come up with numbers from a real perspective,” said Grabow of Cato Institute.
Wilbur Ross, who served as U.S. Secretary of Commerce in the first Trump administration, agreed that truly mutual tariff policies would become “very complicated to do the job.”
“If you literally become each other, you’d put the same tariffs on the same products that the country charges for products from the US,” he said. “But the problem is that we charge different duties on the same item from different countries.”
It would create a loophole for exporters to ship products to the US through lower countries, Ross added. “It’s going to make it easier for people to turn the system into a game,” he said.
What does Trump want to achieve?
Trump aims to achieve three outcomes through his “fair and mutual plans” on trade. It closes US trade deficit $1.2 trillion. And it gains more leverage than its US trading partners.
But experts say trade barriers such as tariffs may not be enough to stimulate US manufacturing jobs that have dropped sharply over the past decades. Federal data shows that from the peak of 19.6 million in 1979, less than 13 million people are employed in manufacturing today.
“For the most part, particularly in low and medium-sized industries, the economy of production is not significantly altered by 10-20% tariffs,” Macadam said. “If labor costs for hubs like Mexico are one-fifth of those in the US, a 20% tariff is not going to cut that, in order for businesses to seriously relocate a lot of production to the US.”
Also, there is unknown how long the new tariffs announced by Trump will remain. Such uncertainty could prevent American or foreign companies from investing heavily in the US in re-illuminating manufacturing.
“For some businesses, even if they reach a point where returning to the US seems economically reasonable, there’s the question: ‘Do these tariffs actually last long?’,” McAdam said. “If you think tariffs are there forever, yeah, we’ll definitely move. But if it reversed or the fees went down, it would have been ridiculous to move.”
What does tariffs mean to consumers?
As businesses said, consumers usually pay the tariff price Plan to pass by Lots of costs to customers.
As a result, a fresh round of tariffs could boost inflation, economists say. According to an analysis by Oxford Economics, if the effective tariff rate on imports into the US rose to 10% in April from 2.5% in 2024, the total price will rise by half percentage points if Oxford Economics expects.
Michael Pierce, senior US economist at Oxford Economics, told CBS Money Watch.
