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The Trump administration will levy an across-the-board tax on all imported goods purchased by Americans and levy additional taxes on imports from countries which officials deem to be placing unfair barriers on the importation or sale of American goods in an effort to forcibly undo decades of globalization and reindustrialize a U.S. economy that has become increasingly dominated by services and knowledge-based work in recent years.
Speaking at an event in the White House Rose Garden to mark what he has called “liberation day” for weeks now, Trump said Wednesday would “forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again.”
After a series of whipsaw days in the market ever since Trump began his saber rattling about tariffs on Mexico, Canada and just about any other country, making the announcement after markets closed made sense to prevent a large market sell-off or a decline in stocks.
He said Americans would, starting in just a few days, pay 34 percent taxes on all Chinese imports, 20 percent on all imports from European Union countries, 32 percent on imports from Vietnam, 24 percent on imports from Japan, using what White House officials described as a formula that bases the tax rates on America’s trade deficits.
At minimum, American will pay what Trump called a 10 percent “baseline tariff” on all imports “to help rebuild our economy and to prevent cheating.”
He also claimed that “foreign nations” would “finally be asked to pay for the privilege of access to our market, the biggest market in the world,” even though foreign countries do not pay tariffs because tariffs are taxes paid by Americans.
Trump, a billionaire whose administration is staffed with some of the wealthiest people in the United States, said Americans would “have to go through a little tough love” as a result of his policies.
The president painted a morose and depressing picture of America’s world-leading economic position as having been “looted, pillaged, raped and plundered by nations near and far, both friend and foe alike” for “decades” and said he was signing an executive order that amounts to “our declaration of economic independence” that would “make America great again, greater than ever before” by taxing Americans without a single vote cast in Congress.
He claimed the “reciprocal tariffs” — import taxes paid by American importers and passed on to consumers in the form of higher prices — will let his administration “use trillions and trillions of dollars to reduce our taxes and pay down our national debt.”
“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, and ultimately, more production at home will mean stronger competition and lower prices for consumers. This will be, indeed, the golden age of America. It's coming back. We're going to come back very strongly,” he said.
Trump then accused some of America’s closest allies of having taken advantage of American generosity by having their own domestic industries while not adopting policies to encourage consumers to purchase American products, particularly with automobiles.
He said his administration will impose a 25 percent import tax on any foreign-made automobiles starting at midnight on Thursday while castigating South Korea and Japan for not buying enough American cars.
“In many cases, the friend is worse than the foe in terms of trade, but such horrendous imbalances have devastated our industrial base and put our national security at risk,” he said.
The president accused American allies of having “ripped off” the United States and harmed American workers, who he said have “watched in anguish” as “foreign leaders … stole” American jobs.
“Foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once beautiful American dream,” he said.
In remarks that alternated between bellicosity and historic and economic illiteracy, the president claimed America had suffered a decline in national wealth because of the imposition of income taxes starting in 1913, rather than the tariffs that had financed federal operations during America’s early years when the country’s central government was far more limited in scope.
“For reasons unknown to mankind, they established the income tax so that citizens, rather than foreign countries, would start paying the money necessary to run our government,” Trump said, again deliberately repeating his false claim about tariffs being paid by foreign governments rather than Americans.
He went on to suggest that the Great Depression following the 1929 stock market crash could have been avoided had the income tax never been instituted and claimed — wrongly — that the U.S. would have had “a much different story” had the disastrous Smoot-Hawley tariff of 1930 been permitted to “save our country.”
Administration officials routinely describe Trump’s unilateral tax increases as his fulfillment of campaign promises to bring manufacturing back to American shores, even as his madcap use of tariffs has alienated some of the country’s closest allies and roiled financial markets over his first three months in the White House.
Almost all mainstream economists and financial experts have decried his policies as the opposite of what the U.S. needs to bring down the record inflation that has plagued American consumers over the last three years. But the president’s top aides, including Commerce Secretary Howard Lutnick, U.S. Trade Representative Jameson Greer and White House trade adviser Peter Navarro have indulged his taste for tariffs despite pleas for him to stop from business leaders.
A senior administration official who briefed reporters on Trump’s plans described the United States — the world’s largest economy — as a helpless victim of nefarious conspiracies by allies and trading partners and said the rest of the world “punishes us” — not only with their own tariffs but with “higher non-tariff barriers” the official called “far worse,” such as “currency manipulation that tax distortions, dumping and export subsidies, punitive technical barriers, ridiculous agricultural constraints, sweatshop labor, pollution havens, widespread counterfeiting and intellectual property theft.”
“As bad as the higher tariffs are, the non tariff barriers are worse — maybe a lot worse,” said the official, who ranted to the reporters on the call about what he described as decades of failures in reporting on globalization its pitfalls, as well as what he called false predictions that the tariffs Trump imposed during his first term would cause inflation.
A second official stated that Trump’s announcement would mark “the start of a new era” in a way that the world has not seen since the U.S. helped establish the post-Second World War international trading order, including by helping found the World Trade Organization and other international organizations that he mocked as “no longer fit for our time in our economic situation.”
Nearly every major metric by which to measure the economy shows that not only would the tariffs fall onto the consumer, but that it could also lead to a word economists dread: stagflation, wherein prices rise while unemployment also spikes.
Inflation kills re-election prospects, as President Joe Biden and nearly every other major world leader learned in 2024 as part of a global anti-incumbent wave. But stagflation is cataclysmic, as the late president Jimmy Carter could have told Trump.
But the White House has insisted that this would not be inflationary. The Atlanta Federal Reserve’s GDPNow model projected that gross domestic product would contract by 3.7 percent, which is lower than it was last week. The Institute for Supply Management reported on Tuesday that economic activity contracted in March.
But markets and the Federal Reserve are not the only group becoming nervous about this. Even a handful of Republican senators are revolting against the tariffs. Sen. Rand Paul, an idiosyncratic libertarian Republican from Kentucky, teamed up with Sen. Tim Kaine, a Democrat from Virginia, to repeal Trump’s tariffs with Canada.
But other Republicans are also nervous about it, particularly Republicans from swing states. Ahead of the announcement, Sen. Thom Tillis of North Carolina, perhaps the most endangered Republican incumbent, explained his concerns despite the fact he said he won’t support Kaine and Paul’s bill.
“I'm assuming worst case scenario, the likely retaliations in the way they'll affect farm country, and in my case, specifically North Carolina, access to markets,” he told The Independent, adding he wanted to see that “every single possible contingency and retaliatory measure has been anticipated.”
Perhaps mindful of this, Trump waited to announce his “liberation day” reciprocal tariffs until 4:00 PM on Wednesday. He did not choose that time by accident. Trump chose that specific time because it would come just as the New York Stock Exchange rang its closing bell to end day trading.
Sen. Chuck Grassley of Iowa said he worried about a 25 percent tariff on potash, which is used to grow corn and soybeans, from Canada, adding he wanted to see if he could get a waiver on potash.
The slapdash nature of Trump’s tariffs meant that even up to the final minute, even some Republicans did not know what would happen.
“Do you even know that they're going into play today?” Sen. Lisa Murkowski of Alaska, whose state borders Canada, asked The Independent in response to a question. “I don’t either. So hold on tight.”
Markets will likely be holding on tight as well come opening bell on Thursday morning. Trump has effectively bet his entire legacy on the tariffs, ensuring that it will usher in his proposed new golden age of American prosperity. But as of right now, the world,markets and even many in his own party remain unconvinced
