Update (4:30 p.m. ET): “We have very, very good news today,” Trump began his speech, shouting, “This is liberation day.”
“April 2, 2025 will forever be remembered as the day American industry was reborn, the day American destiny was reclaimed, and the day we began to make America prosperous again,” Trump says.
“For decades, our country has been plundered, pillaged, raped, and plundered by nations near and far, by friends and foes alike. America’s steelworkers, autoworkers, farmers, and skilled artisans—they are with us today in great numbers. They have suffered truly.”
“In a few moments, I will sign a historic executive order, reciprocal tariffs for countries around the world. Reciprocal. That means they do it to us and we do it to them. Very simple. It doesn’t get any easier than that.”
Trump presents his theory that tariffs will bring the US back to a “golden age,” which he also used in his inaugural address:
“Jobs and factories are coming back to our country, and you can see that happening already. We are recharging our domestic industrial base.”
According to Trump, reciprocal tariffs will bring “stronger competition and lower prices for consumers” in the US.
Trump finally declares details of his tariff plan a “declaration of economic independence”.
Specifically, Trump announced a base tariff rate of 10% for all countries starting April 5 (down from the consensus of 15% and 20% in the worst case).
Trump confirmed a 25% tariff on all auto imports.
BUT specific reciprocal tariffs for “bad actors” starting April 9th.
Trump further said that these are not full reciprocal tariffs and then held up a chart showing the (trade-weighted average) tariff levels of individual countries:
Here is the complete list:
Here are some details:
- China: 34% (which exceeds the current 20% tariff, meaning a total tariff of 54%)
- EU: 20%
- Japan: 24%
- United Kingdom: 10%
- South Korea: 25%
- Thai: 36%
- Switzerland: 31%
- Taiwan: 32%
- Malaysia: 24%
Here are the countries most affected:
- Iraq 39%
- Mauritius 40%
- Syria 41%
- Falkland Islands 41%
- Vietnam: 46%
- Madagascar 47%
- Laos 48%
- Cambodia 49%
- Lesotho 50%
- Saint Pierre and Miquelon 50%
Mexico and Canada are not on the list as the US continues to release goods that are compatible with USMCA.
For Canada and Mexico, existing fentanyl/migration IEEPA regulations remain in effect and are not affected by this order. This means that non-USMCA goods will continue to be subject to a 0% tariff, non-USMCA goods will continue to be subject to a 25% tariff, and non-USMCA energy and potash goods will continue to be subject to a 10% tariff. If existing fentanyl/migration IEEPA orders are terminated, USMCA-compliant goods will continue to receive preferential treatment, while non-USMCA goods will be subject to a 12% reciprocal tariff.
Loonie and peso rallied on news…
The reciprocal tariff does not apply to some goods.
These include:
(1) items subject to 50 USC 1702(b);
(2) steel/aluminum products and automobiles/auto parts, which are already subject to Section 232 tariffs;
(3) copper, pharmaceuticals, semiconductors, and lumber;
(4) all articles to which Section 232 tariffs may apply in the future;
(5) bullion; and
(6) energy and certain other minerals not available in the United States.
Initially, markets heard Trump’s comments as better than expected and futures rose on the news, but then when he revealed a table of specific tariffs, futures fell …
Treasury yields also fell, erasing the day’s gains…
“If you want your tariff rate to be zero, build your product right here in America, because there is no tariff if you build your factory, your product in America,” Trump concluded:
“Also, to all the foreign presidents, prime ministers, kings, queens, ambassadors, and everyone else who will be calling soon to request exemptions from these tariffs, I say, end your tariffs, eliminate your barriers, stop manipulating your currencies.”
The White House published a full fact sheet here…
“These tariffs will remain in effect until President Trump determines that the trade deficit and the threat of underlying non-reciprocity have been met, resolved, or mitigated.”
And lead the negotiations…
Adam Hetts, global head of multi-assets at Janus Henderson, thinks this is an opening for negotiations and the question is how much economic pain Trump is willing to endure:
“The outstanding tariffs by country scream “negotiation tactics” that will keep markets on the front lines for the foreseeable future. Fortunately, this means there is plenty of room for lower tariffs from here, albeit with a 10% base rate. We have seen the administration take surprisingly little pain in how much market tolerance there is to open up.”
Finance Minister Bessent appeared on Bloomberg Television with a simple message to the world: don’t panic, don’t retaliate.
“As long as you don’t pay back, that’s the high end of the number,” he says.
