On April 2, 2024, U.S. President Donald Trump announced a new tariff policy described as the most extensive and severe to date, referring to the date as "Freedom Day." The announcement was made at the White House, where Trump unveiled a significant increase in tariffs on goods imported from multiple countries, creating a sense of alarm among global economic partners.

The U.S. now imposes a baseline tariff of 10% on all imports, with steeper tariffs on key trading partners.

Specifically, imports from the European Union will face a 20% tariff, while goods from China will be subject to a 34% tariff.

Additional countries, such as Vietnam and Cambodia, face even higher tariffs of 46% and 49%, respectively.

These tariffs are set to take effect in two phases, with the baseline 10% tariffs commencing on April 6, 2024, and the higher rates beginning on April 10, 2024.

The announcement was justified by Trump as a necessary response to what he characterized as unfair tariffs imposed on U.S. products by various countries.

He claimed that many nations have been imposing significantly higher tariffs on American products than the tariffs the U.S. has levied on imports from those nations.

In his address, Trump suggested that these measures would help restore the country’s economic strength.

Trump indicated that higher tariffs could have been implemented, but settled on a strategy that would see reciprocal tariffs that are essentially half of what other countries are imposing on U.S. goods, with a minimum of 10% applicable to all.

The new tariff rates on major U.S. trading partners, effective from April 10, 2024, include:

China – 34%
European Union – 20%
Vietnam – 46%
Taiwan – 32%
Japan – 24%
India – 26%
South Korea – 25%
United Kingdom – 10%
Notably absent from this list is Mexico and Canada, which had previously been affected by tariffs imposed during Trump's first term; however, the tariffs announced today do not apply to products covered under the United States-Mexico-Canada Agreement (USMCA).

In response to the newly proposed tariffs, the overall sentiment among American businesses appears mixed, with many company executives expressing concerns about the chaotic and unpredictable nature of Trump's trade policy.

A significant majority of corporate leaders at a prominent Yale University event voiced skepticism about the long-term benefits of the tariff strategy.

As the international community took note of these developments, leaders in various countries began making statements regarding their potential responses.

European Commission President Ursula von der Leyen indicated on April 1, 2024, that the European Union is prepared to retaliate if necessary, although she pointed out that Europe did not initiate the current tensions.

In a separate statement, the European Commission had previously suggested the imposition of tariffs on approximately $4.5 billion worth of U.S. imports, ranging from denim jeans to bourbon and motorcycles.

Plans for further action could involve additional tariffs specifically targeting major American tech companies operating within Europe, pending consensus among EU member states.

Economists and analysts predict that the announced tariffs are likely to elevate inflation and cause disruptions in global supply chains.

The Federal Reserve has adjusted its inflation forecasts in light of the new tariffs, anticipating an increase in inflation rates due to the pass-through effects of tariffs on consumer prices.

Many fear that the brevity of the economic recovery could be threatened, with discussions surrounding the possibility of a recession occurring as a direct consequence of these aggressive trade measures.

In summary, the tariff announcement marks a significant escalation in the ongoing trade disputes, impacting various aspects of international relations and economic dynamics while raising concerns about the potential consequences for the American economy and its global partners.