IRIA News

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The United States’ sweeping reciprocal tariffs have marked a significant shift in U.S. trade policy and igniting a firestorm of reactions from allies and rivals alike.

Branded by the U.S. President Donald Trump as “Liberation Day,” the move implements his long-promised “Fair and Reciprocal Trade Plan”, a policy built on mirroring the tariff rates imposed by other nations on U.S. goods.

“All countries” will be affected, Trump warned just days before the tariffs came into force. Despite calling the new measures relatively “kind,” especially compared to foreign tariffs on American products, analysts and global leaders are raising alarms over the consequences that may follow.

The foundation of the policy was laid on February 13, when Trump announced a comprehensive review of global tariffs on U.S. exports. Under his Fair and Reciprocal Plan, the U.S. will impose tariffs equivalent to those that other countries levy on American goods. The intent, as stated by Trump, is to close the yawning U.S. trade deficit, reinvigorate American manufacturing, and finance future tax cuts.

Critics say the real-world implications are far from positive. “The global economy is fundamentally different today than it was yesterday,” said Canadian Prime Minister Mark Carney, announcing a limited set of countermeasures. “The United States had abandoned its historic role as a champion of international economic cooperation.”

Tariffs as high as 54%

The penalties unveiled on Wednesday include a baseline 10% tariff on all imports and significantly higher rates for targeted countries. China was hit with a 54% tariff, while Taiwan and South Korea face 32% and 25%, respectively.

Even U.S. allies such as Japan were not spared, with a 24% tariff imposed. European countries, facing up to 20% duties, are bracing for economic fallout. Imports to the U.S. now face an average duty of 22.5%, up from just 2.5% last year. Trump celebrated the tariffs on social media, declaring: “THE OPERATION IS OVER! THE PATIENT LIVED, AND IS HEALING.”

Global retaliation and economic repercussions

The response from the international community has been swift. China retaliated with new tariffs on U.S. crude oil, agricultural machinery, large-displacement vehicles, and pick-up trucks. French President Emmanuel Macron urged a freeze on European investment in the United States. The European Union and other nations are weighing further retaliatory measures.

Emerging economies, especially in Africa, Latin America, and Southeast Asia, are among the worst hit. “The consequences will be dire for millions of people around the globe,” warned European Commission President Ursula von der Leyen.

Stellantis, the automaker behind Jeep and Chrysler, has announced temporary layoffs in the U.S. and plans to halt production in Canada and Mexico. General Motors is ramping up domestic production to sidestep the tariffs but warned of near-term disruptions.

Inflation and recession risk

The economic stakes are significant. The U.S. trade deficit reached $1.1 trillion in 2023 and has remained above that level for four consecutive years. While the administration believes reciprocal tariffs will boost exports and reduce dependency on imports, economists are skeptical.

Analysts warn the tariffs could reignite inflation, burden consumers with higher prices, and increase the risk of a U.S. recession. The average American family could see living costs rise by thousands of dollars annually, potentially undermining Trump’s key campaign promise to reduce the cost of living.

Federal Reserve analysts say regions that strongly backed Trump in the last election might be hit hardest by inflation. Meanwhile, business leaders are scrambling to reassess supply chains, reconsider expansion plans, and forecast rapidly shifting consumer demand.

The move also threatens U.S. strategic goals. By imposing tariffs on key Asian partners like South Korea, Taiwan, and Japan, nations hosting major U.S. military installations, the administration risks alienating allies and undermining regional coalitions aimed at countering China.

Trump’s Broader Agenda

Trump’s return to the White House has been marked by an erratic approach to tariffs, frequent threats followed by sudden retractions. Though the reciprocal tariffs would not be fully enforced until April 9, Commerce Secretary Howard Lutnick said that “The president is not going to back off what he announced yesterday.”

As Washington pushes forward, the broader vision remains murky. Trump’s rhetoric suggests a fundamental reorientation of U.S. trade priorities, aimed not just at economic metrics but also at reshaping the post-WWII global order that once championed liberal trade.

End of free trade era

While some countries, including Mexico, India, and South Korea, are adopting a wait-and-see approach in hopes of negotiating concessions, the landscape is shifting. The free trade era that shaped decades of global economic policy appears to be giving way to an era of transactional nationalism.

Germany’s economy minister Robert Habeck urged European nations to explore alternative alliances, while German Chancellor Olaf Scholz discussed strengthening inter-European trade links. If reciprocal tariffs spiral into full-blown trade wars, the collateral damage could be severe not just for governments and corporations, but for billions of ordinary people around the world.

"IT'S LIBERATION DAY IN AMERICA!" –President Trump 🇺🇸🦅 pic.twitter.com/UvgJEpJgEW

— The White House (@WhiteHouse) April 2, 2025