The fourth month of 2025 has in Britain been widely dubbed ‘awful April’ in the UK media, with consumers facing a cocktail of price rises on everything from utility bills to council tax kicking in on 1 April. Yet considering events just a day later on 2 April, governments, business, and consumers the world over will relate to the ‘Awful April’ moniker – even if detached from unique British circumstances.
2 April – or ‘Liberation Day’ as Trump has referred to it, saw the US President impose sweeping tariffs on nearly every country in the world. Trump - a known tariff enthusiast who has long argued that globalisation and free trade have allowed the rest of the world to ‘rip off’ the United States - announced the extensive trade restrictions from the Rose Garden, complete with a board detailing the tariffs the US is supposedly charged, and the new White House ‘discounted’ tariff rates. South Korea, for example, was claimed to charge the US 50 per cent tariffs, and so has been slapped with 25 per cent duties. Among the most eye-catching entries were for Cambodia and Vietnam - now charged respectively with 49 and 46 per cent tariffs to cover the 97 and 90 per cent they are said to charge the US - tariffs that will seriously harm Phnom Penh and Hanoi’s manufacturing industries.
The USTR released its calculations for tariff rates by country, which have baffled many economists, involving taking the US trade deficit with said country as a proxy for unfair practices, dividing it by US imports from that country, and halving the ratio between the two. Needless to say, there are good reasons why a trade deficit might exist that have nothing to do with malpractice - for example that the US imports goods like coffee and bananas it is unable to meet demand for domestically, but that is by the by.
At the same time, Trump argued that tariffs would promote the interests of blue-collar workers by encouraging manufacturing industries to return to the US, as well as providing revenue to fund tax cuts. In theory this might be possible, but the US will need to build out its manufacturing base FAST for consumers to avoid inflation and higher costs. It’s more likely, though, that consumers will indeed face elevated prices, while exporters suffer the consequences of retaliatory action.
On top of these country-by-country tariffs, Trump also established a 10 per cent ‘baseline’ rate for tariffs, with duties on imports from countries like the UK, Brazil, Australia, and Saudi Arabia staying at that level. Other countries have not been so lucky, with new tariffs extending all the way to 50 per cent for Lesotho. If that wasn’t enough, Trump has jacked up Chinese tariffs by another 34 per cent on top of existing duties, with some fearing levies could rise to over 60 per cent. Unsurprisingly, economists have warned that China’s export-driven economy could see reduced GDP growth this year - making Beijing’s 5 per cent target, and its fight against deflation, an uphill struggle. In a sign of just how extensive the new tariff regime is, Heard Island and McDonald Islands - uninhabited Australian-administered islands in the southern Indian Ocean last visited by humans a decade ago - have been slapped with 10 per cent duties.
The events of “Liberation Day” have certainly wrought havoc on the stock markets, with Trump’s announcements wiping USD 2.5 Tr of market value from Wall Street equities by sending the S&P 500 tumbling 4.8 per cent. The dollar also fell 1.7 per cent on Thursday, and a further 0.2 per cent on Friday - erasing all its gains since Trump’s election win back in November. On top of this, IMF managing director Kristalina Georgieva warned that Trump’s tariffs represent a “significant risk” to the global economic outlook, and J P Morgan has said it now sees a 60 per cent chance that the global economy enters a recession by the end of the year - up from its previous assessment of 40 per cent.
In terms of the world’s reaction, the Europeans have promised they will not take the news lying down. French President Emmanuel Macron has urged European companies to pause investment in the US, and has warned that “nothing is excluded” in the way of retaliation. Such action may well, as US Treasury Secretary Scott Bessent warned, lead to further American escalation, and whilst we still need to wait and see what course of action Europe takes, this latest hostile action by its traditional ally has done significant diplomatic, and economic, damage. While Brussels deliberates on forming a coherent response, Beijing on Friday announced it would impose 34 per cent tariffs on US goods effective 10 April, and an immediate slew of export controls on rare earth metals. China is forthright that it will not let itself be pushed around by Washington, and having been singled out for special animus in Trump’s new world order, has predictably come back swinging with the biggest counter-escalation.
It’s still possible there are deals to be done, and that the US’s trade partners may lower their tariff rates by increasing efforts to, say, tackle illegal immigration. Yet with the 10 per cent baseline firmly in place, it’s unclear whether much can be done to return to the status quo ante.
We might be tempted to give the last word to French Prime Minister François Bayrou, who described Trump’s announcements as “a catastrophe for the world economy” and “a catastrophe for the US and for American citizens” who will, after all, pay the cost of tariffs. Whether this is a price the US public is willing to pay remains to be seen, but even before Liberation Day, polling revealed 63 per cent of Americans to have a negative view of the government’s economic policy - the highest figure since records began in the 1970s. To his credit then, Trump may have done the unthinkable in uniting the world, and much of the US public, on common ground. A shame for him that it’s in opposition to his policies.