D-day for Trump tariffs amid growing global trade tensions

US President Donald Trump was on the verge of implementing broad new tariffs on global trade partners on Wednesday, 2 April, a move that would disrupt long-standing trade norms, potentially increase costs, and invite retaliatory actions from multiple nations.

The specifics of Trump's 'Liberation Day' tariff policy were still being finalised and kept confidential before an official announcement set to take place in the White House Rose Garden at 8.00 pm GMT (1.30 am IST, Thursday), as per a Reuters report.

According to White House spokesperson Karoline Leavitt, the newly proposed tariffs would take effect immediately upon Trump's declaration. Additionally, a separate 25 per cent duty on automobile imports worldwide is scheduled to be enforced beginning 3 April.

More than one US trade partner has taken advance action in an attempt to preempt reciprocal tariffs. India, for instance, is reportedly considering a significant reduction in tariffs on over half of US imports, valued at $23 billion, as part of the initial phase of a trade agreement between the two countries, as per a Reuters report last week.

Israel, meanwhile, has announced the elimination of all tariffs on imports from the United States, though the reduction is largely seen as a diplomatic and political gesture rather than an economic one, as a 40-year-old free trade agreement between Israel and the United States already exempts 99 per cent of US imports from duties, Xinhua news agency reported.

For weeks, Trump has advocated for these tariffs as a strategy to bring US tariff levels in line with those imposed by other countries and to counteract non-tariff barriers that hinder American exports. However, uncertainty remained regarding the exact structure of the duties, with some reports suggesting he was contemplating a universal 20 per cent tariff.

A former trade official from Trump’s first term told Reuters that rather than a blanket tariff, Trump was more inclined to introduce country-specific tariffs at slightly lower rates. The same former official suggested that the number of nations targeted under these tariffs would likely surpass the approximately 15 countries that treasury secretary Scott Bessent had previously identified as having substantial trade surpluses with the US.

Bessent informed Republican lawmakers on Tuesday that these reciprocal tariffs would serve as a "cap" representing the maximum tariff level a country could face, with the possibility of reductions if those nations complied with US demands, according to Representative Kevin Hern.

Since taking office just over 10 weeks ago, the Republican President has already implemented new 20 per cent tariffs on all Chinese imports in response to fentanyl-related concerns and reinstated 25 per cent duties on steel and aluminum, extending these to include nearly $150 billion worth of related downstream products. Additionally, a temporary exemption from the fentanyl-related tariffs for most Canadian and Mexican goods is set to expire on Wednesday.

Administration officials have clarified that all of Trump's tariffs, including previous rates, will be cumulative. This means a Mexican-manufactured car, which previously faced a 2.5 per cent duty when entering the US, would now be subject to both the fentanyl-related tariff and the new automobile tariff, totaling a 52.5 per cent duty — potentially alongside any additional reciprocal tariff imposed on Mexican products.

This growing uncertainty surrounding tariffs has begun to undermine investor, consumer, and business confidence, raising concerns about slower economic activity and higher costs.

Economists from the Federal Reserve Bank of Atlanta recently reported that corporate financial executives expect the tariffs to drive prices higher this year while negatively impacting hiring and economic growth.

Investors have responded nervously, selling off stocks for over a month, erasing nearly $5 trillion in US stock market value since mid-February. On Tuesday, Wall Street ended with mixed results as investors awaited further clarity from Trump’s forthcoming announcement.

Global trade partners, including the European Union, Canada, and Mexico, have pledged to respond with counter-tariffs and other retaliatory measures, even as some nations attempt to negotiate with the White House.

Canadian Prime Minister Mark Carney and Mexican President Claudia Sheinbaum discussed Canada’s approach to opposing what they consider "unjustified trade measures" by the US, according to a statement from Carney’s office on Tuesday.

"With challenging times ahead, Prime Minister Carney and President Sheinbaum emphasized the importance of safeguarding North American competitiveness while respecting the sovereignty of each nation," the statement read.

Some American businesses report that a 'Buy Canadian' sentiment is gaining traction, making it more difficult for US products to find shelf space in Canadian stores.

Trump has long argued that American workers and manufacturers have suffered owing to trade agreements that lowered international trade barriers, fuelling the expansion of a $3 trillion market for imported goods in the US.

However, Trump views this influx of imports as a major drawback, citing a heavily imbalanced trade relationship between the US and the rest of the world, with a goods trade deficit exceeding $1.2 trillion.

Economists caution that Trump’s aggressive tariff strategy could drive up domestic and global prices while dealing a significant blow to the world economy. According to the Yale University Budget Lab cited by the Reuters report, the additional 20 per cent tariff, on top of existing levies, would result in an estimated increase of at least $3,400 in annual costs for the average US household.

With agency inputs