Good morning.
Yesterday, April 2, 2025, President Donald Trump announced sweeping new tariffs during a Rose Garden event at the White House, declaring the day "Liberation Day." He introduced a 10% baseline tariff on all imports and additional "reciprocal tariffs" targeting specific nations based on their trade practices and deficits with the United States. These measures aim to boost domestic manufacturing, create jobs, and generate revenue for the U.S. government, which he described as a declaration of economic independence.
President Trump invoked the International Emergency Economic Powers Act (IEEPA) to implement these tariffs without congressional approval, citing a national economic emergency caused by persistent trade deficits and nonreciprocal trade practices. While he promised economic revitalization, critics warned of potential price hikes for consumers and disruptions to global trade relationships.
President Trump, utilizing his authority under IEEPA, announced the imposition of a 10% tariff on imports from all countries. This policy will take effect on April 5, 2025, at 12:01 a.m. EST. He announced the implementation of individualized reciprocal tariffs for countries with which the United States has the largest trade deficits. These nations will face higher tariffs, while all other countries will remain subject to the baseline 10% tariff. The new tariffs will take effect on April 9, 2025, at 12:01 a.m. EST.
For Canada and Mexico, the existing IEEPA orders addressing fentanyl and migration remain unchanged and unaffected by this new directive. Under these orders, USMCA-compliant goods will continue to be exempt from tariffs, maintaining a 0% rate. Non-USMCA-compliant goods will face a 25% tariff, while non-compliant energy and potash imports will be subject to a 10% tariff.
We anticipate that the extremely high figures presented will expedite the negotiation process. We are uncertain about what constitutes fair figures in this context. Additionally, we have no clear indication of how long the negotiations will last.Trump Tariffs signal the end of the globalization era.
Wall Street futures plunged as fears of a trade war and potential recession intensified following Trump's tariff announcements. Global markets are also reacting negatively, with U.S. allies and other countries planning retaliatory measures.
Other events:
Initial Jobless Claims: The U.S. reported 219,000 initial jobless claims for the week ending March 29, slightly above the forecast of 224,000.
U.S. Trade Deficit: February's trade deficit improved to -$122.7 billion, down from -$131.4 billion in January. After a significant surge starting in November, when imports were $351.8 billion, the total value of imports of goods and services remained relatively stable at approximately $401.1 billion.
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