‘Liberation Day’ tariffs set the stage for ‘chaos’ as countries react: Expert

[Donald Trump]

“My fellow Americans, this is Liberation Day. Been waiting for a long time.”

[Simone Del Rosario]

Liberation Day marked the launch of sweeping tariff policies that will reshape global trade. The day has come and gone, but the aftermath is leaving nations scrambling and economists warning of chaos.

[Donald Trump]

April 2nd, 2025 will 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.”

[Mary Lovely]

I think a better name for this day would be watch your wallet day. And I think Americans are better start watching their wallets right away.

I’m Mary lovely. I’m an international trade economist. I am a senior fellow at the Peterson Institute for International Economics

I believe there’s going to be a lot of chaos around this, especially because at the same time, they revoked the so called de minimis provision, which allowed packages under $800 to come in without the real fancy kind of customs treatment.

[Simone Del Rosario]

President Donald Trump’s latest tariff campaign received a quick rebuke from nations on the receiving end of those penalties.

As U.S. Commerce Secretary Howard Lutnick made the media rounds Thursday morning, he pointed out the latest tariffs are a jumping-off point for the greatest deal-maker in the world.

[Howard Lutnick]

We’re talking with all of the major countries of the world. And we’ve been talking to them for more than a month. This has been coming, we said it’s been coming. The key is, will they take our agricultural products? Will they treat us fairly? Can they treat us fairly? And the answer is, over time, that is going to be yes.

[Howard Lutnick]

I think for me, the greatest thing, for me is that Donald Trump is sitting behind the resolute desk in the Oval Office, and he is the greatest deal maker, and he will decide how he wants to play his hand.

[Simone Del Rosario]

Japanese trade minister Yoji Muto said he will “urge the US to exempt Japan from these tariffs.” Japan faces 24% tariffs in Liberation’s Day’s wake.

[Mary Lovely]

I think that countries are trying to figure out what Trump would want in a deal for these to reduce these tariffs, but we have to realize that if he does that, goes against two of his stated objectives, which is one to reassure activity to the United States. He’s definitely been way out front promising Americans that, and if he rolls back the tariffs, well, doesn’t that cancel that out? That’s the incentive, right there. And secondly, he doesn’t get the tariff revenue that he needs to not explode the budget deficit,

I worry about, you know, what kind of deals other countries hope to hope to cut with the trade team? Will these be transparent? How did they relate to U.S. law?

One of the problems with arbitrary trade policy is that there is a lot of room for, if not at the actual corruption, for the appearance of corruption and the belief by foreigners at the US, trade policy, Commercial policy no longer operates according to To law.

[Simone Del Rosario]

Mary Lovely also cast doubt on countries following through with their deals.

[Mary Lovely]

are they worth the paper that they’re written on? We didn’t see China really following through. Part of that was the pandemic. It was problems that Boeing had for idiosyncratic reasons. Because, you know, when China buys some aircraft. That’s a big number. But overall, what is sustaining power, sustainability of these personalized types of promises

[Simone Del Rosario]

While the negotiating door is certainly open to the president behind “The Art of the Deal,” some nations are immediately choosing a retaliatory path.

China, which faces a 34% tariff on top of an existing 20% rate, called on the U.S. “to immediately lift its unilateral tariff measures and properly resolve differences with trading partners through equal dialogue.” The EU is also vowing to react.

[Ursula von der Leyen]

“President Trump’s announcement of universal tariffs on the whole world including the European Union is a major blow to the world’s economy.”

“At the same time, we are prepared to respond. We are already finalizing the first package of countermeasures in response to tariffs on steel, and we’re now preparing for further countermeasures to protect our interests and our businesses if negotiations fail.”

[Mary Lovely]

So, this is a different opponent, right? This is, this is a very large economy with a complicated political economy, right? They have the Member States trade policy is a an EU competency means that it’s set for the whole membership.

their tariff rates are tied to the EU. Overall, the EU has been a fairly steadfast advocate of the World Trade Organization. This is a major change for them to just lower rates on the United States violate some of the main tenants of the World Trade Organization that you don’t you know, discriminate among your among the members, I think it’s going to be very hard for them just to say, I’m going to make a lot of purchases.

[Simone Del Rosario]

The EU may be in a unique spot, but their response is not unique.

Mark Carney:
We are gonna fight these tariffs with countermeasures.”We are going to protect our workers, and we are going to build the strongest economy in the G7.”

[Mary Lovely]

“Retaliation is a huge risk. I think we’re seeing a lot of countries, choosing, depending on their own political economy. So for example, in Canada, with an election coming, we’ve seen Mark Carney say that he will, he will respond. Other countries are saying, well, that’s not, perhaps in our own interest.

Overall, it’s going to depend again on what is the election cycle. What do how do people feel about their leaders, their country being, in a sense, bullied by the United States? Do they demand action? Would they like to see the government be more conciliatory because there’s a lot at risk?

[Simone Del Rosario]

If the tariff rates stand, Lovely says this will kick off a global trade war that will be much different from Trump’s first term.

[Mary Lovely]

they say the last time that they did this, you know, we didn’t see a gigantic spike in the CPI. We didn’t see the economy slowing. I think. We’re at a very different place in the business cycle. This time going after all of our trading partners is very different because, among other reasons, China was able to reroute. Other countries were able to partly, not entirely, partly, with the help of Chinese investment into their manufacturing sector were able to provide untapped substitutes, and that basically made the burden on Americans smaller. Here, it’s very difficult to see what this complicated web of tariffs is leading to in terms of how multinationals will rearrange their supply chains.

[Simone Del Rosario]

However that sorts out on a global scale, Lovely predicts Americans will see those price spikes in time for back-to-school shopping. For SAN, I’m SDR.