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Trump & Elon's grand plan to liberate you EVEN MORE
Trump is worried that Liberation day was a flop. Elon Musk has some ideas for how to make it Great Again. #PUPPETREGIME
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President Donald Trump, seen here on the South Lawn of the White House in February, is set to unveil his "Liberation Day" tariffs.
Trump’s tariff plan to take effect
T-Day has arrived. On Wednesday afternoon, Donald Trump’s reciprocal tariffs on US trade partners will take effect immediately after a Rose Garden announcement.
The devil’s in the detail: Trump has reportedly settled on the main aspects of the plan, and has been talking over the fine print with his top advisers. The administration has reportedly weighed a few different options for the overall scheme, including imposing different tariff rates on each trading partner, targeting specific countries, or enforcing a blanket tariff — possibly as high as 20%.
The pros and cons: By building a tariff fortress around the world’s biggest economy, Trump is fulfilling a campaign pledge while also seeking revenue to offset tax cuts. US steelmakers and other domestic manufacturing have supported the targeted use of tariffs, citing unfair import competition, but have come out against blanket tariffs or tariffs on Canada – which particularly hurts the auto industry.
Meanwhile, Wall Street fears it could trigger a recession and slow global growth as small businesses and consumers may face rising prices as imports become more expensive. The Yale Budget Lab projects the policy will equate to a 13-point hike in the US effective tariff rate, raising prices by 1.7-2.1% and lowering real GDP growth by 0.6-1.0 percentage point in 2025.
“Markets are bracing for a seismic shift as Trump’s global reciprocal tariffs loom,” says Eurasia Group trade and global supply chain expert Nancy Wei. “The mix of rising inflation and slowing industrial activity signals a precarious balance, with businesses scrambling to front-load inventory and mitigate pricing uncertainty.”
“With demand weakening and costs climbing, companies are navigating an increasingly challenging economic landscape.”
For more insights from Nancy Wei, check out our Viewpoint about “Liberation Day” here.President Donald Trump speaks from the Oval Office flanked by Commerce Secretary Howard Lutnick on the day he signed executive orders for reciprocal tariffs, Feb. 13, 2025.
Opinion: Searching for signals on ‘Liberation Day’
Now in its third month, Trump 2.0 has sustained a breakneck pace. In recent days, the administration announced 25% tariffs on automobiles, conceived of secondary tariffs for nations buying oil from Venezuela (and potentially Russia and Iran), and reiterated its interest in “getting” Greenland.
Market participants have held their breath for Wednesday – “Liberation Day” – as the administration is set to unveil global tariffs, the lynchpin of its America First trade policy.
As the zone has flooded, predicting the current administration’s next moves has become an Olympic-level sport. Details of a group chat between senior administration officials that leaked last week – the so-called Houthi PC small group – provide allies, adversaries, and watchers with revealing insights into the administration’s foreign policy blueprint.
Reestablishing deterrence
While campaigning, President Donald Trump was fond of saying that no wars broke out during his presidency and that the conflicts in Ukraine and Israel-Gaza would never have happened if he had been president. In the run-up to his inauguration, Trump promised to end the war in Ukraine on his first day in office (later extended to within six months). On Gaza, Trump posted on social media that Hamas would have “all hell to pay” if they did not release Israeli hostages before he was sworn in.
Whether the administration was prepared to back up these threats with action hung as a giant question mark. During his first term, Trump largely avoided large-scale security operations. The major exception was the January 2020 assassination of Qasem Soleimani, commander of Iran’s Quds Force. This time, the risk of threatening “all hell” is that to establish credibility, you may have to administer “all hell.”
On March 15, the US military began conducting a series of air strikes on Iran-backed Houthi militants in Yemen – the operation at the heart of the group chat.
Exchanges in the chat tell us this use of force was strategic by design.According to the transcript, after Vice President JD Vance shared concerns about conducting the attacks, Secretary of Defense Pete Hegseth countered, “We are prepared to execute, and if I had final go or no go vote, I believe we should. This is not about the Houthis. I see it as two things: 1) Restoring Freedom of Navigation, a core national interest; and 2) Reestablish deterrence, which Biden cratered.” The message is clear: this is not about the Houthis; this is about the Trump 2.0 administration telegraphing its willingness to carry out “all hell.” TheUS has reportedly deployed B-2 bombers and cargo planes to the region as a further indicator of the administration’s apparent willingness to conduct additional strikes.
A ledger of allies
Hegseth’s remarks also reveal another principle of the Trump 2.0 foreign policy: Isolationism is dead, long live America First. During the first Trump administration, there was a sense that the president’s focus on rebuilding manufacturing jobs and tightening immigration meant that the US was taking its ball and going home. Now, Trump and his team are scanning the horizon, looking for angles, and from Greenland to Canada to Venezuela and Yemen,no stone is being left uncovered.
Since Oct. 7, 2023, Houthi militants have targeted shipping assets traversing the Red Sea, depressing trade through the channel and setting off a global rerouting of trade. Trump ordered the sea lanes reopened. As laid out in the group chat, the administration sees it as the US's role and a core national interest to restore freedom of navigation. In fact, according to Hegseth, “VP: I fully share your loathing of European free-loading. It’s PATHETIC. But [US National Security Advisor Mike Waltz] is correct, we are the only ones on the planet (on our side of the ledger) who can do this. Nobody else even close.”
Much has been made of the anti-Europe tone of the conversation. Anyone sitting in European capitals will certainly be disappointed by the language and accompanying content that the US will be looking to Europe to foot its security bill. But anyone sitting in European capitals hopefully already knows to expect this. That Trump (like President Barack Obama before him and President Joe Biden after him) wants to see Europe pay more for its collective defense is not new or news. What should, however, buoy Europe is that the US still counts itself on the same side of the ledger as its Western allies and that it feels a responsibility – a unique responsibility – toward them. This is not a case of the US pulling up the drawbridge. This is a US administration taking aim and looking for others to help settle the bill.
There can be no doubt that following the daily turns of the US administration can leave the rest of the world gasping for air. In his second term, Trump’s true north is legacy – perhaps even athird term. Through a relentless drive on tariffs, secondary tariffs, sanctions, export controls, and other measures, he is further aligning national security and economic security toward an ambition of bringing revenue and investment back to the US. This is a years-long project, beginning on Liberation Day, and no three-month period can definitively judge its outcome. The administration initiated the Houthi operation to backstop its economic policy prong with a hard-power policy prong. Going forward, when threats of a “bad situation” or of bombing Iran are made unless a deal is struck, they will carry weight.
Still, Trump hopes that his “proudest legacy will be that of a peacemaker and unifier.” The US is not leaving the world alone, for better or for worse.
Lindsay Newman is a geopolitical risk expert and columnist for GZERO.
President Donald Trump holds an executive order about tariffs while flanked by Commerce Secretary Howard Lutnick in the Oval Office on Feb. 13, 2025.
Viewpoint: What to expect from Trump’s tariff “Liberation Day”
As in other parts of his agenda, President Donald Trump has wasted no time pursuing his goal to rebalance trading relationships and revitalize US manufacturing by imposing tariffs on imports. Also, like other parts of his agenda, the tariff rollout has been chaotic, with some new measures announced, then delayed, and later reimposed.
Despite the concerns of business leaders and investors about the economic impact of these measures – which have prompted a stock market sell-off – Trump remains committed to his approach. He argues that any short-term pain will translate into long-term gain as businesses move their operations to the US and plans to announce a sweeping new round of tariffs on April 2. We asked Eurasia Group expert Nancy Wei what to expect from what Trump is billing as a “Liberation Day” from an unfair global trading system.
What measures would you highlight?
We are expecting reciprocal tariffs on countries around the world and announcements of new probes that lead to tariffs on specific product categories. Reciprocal tariffs are set in response to other countries’ trade barriers, including tariffs, taxes, and different types of non-tariff trade barriers. Another important criterion is the existence of a trade surplus with the US, seen by the Trump administration as evidence of unfair trade practices. Reciprocal tariffs apply to all goods a country exports to the US.
Which countries do you expect to be targeted?
There are three groups. The first includes trading partners with large trade surpluses with the US or that Trump has threatened to tariff for other reasons. China, Mexico, Canada, the EU, India, Vietnam, Japan, South Korea, Brazil, Malaysia, Thailand, and Indonesia all have large trade surpluses with the US. Denmark has drawn threats of tariffs for its unwillingness to discuss transferring control of Greenland to the US, while the EU has drawn Trump’s ire for its low defense spending. We expect Trump to use the International Emergency Economic Powers Act to apply tariffs on these countries immediately. After imposing 25% tariffs on Mexico and Canada on Feb. 1, Trump agreed to pause them a few days later. We expect the 25% tariff to fully take effect soon after April 2 (with a 10% carveout for Canadian energy products).
Countries in the second group (which have lower trade deficits) and in the third group (the rest of the world) will remain vulnerable to reciprocal tariffs later in the year. The risks for those in the third group will rise over time as countries in the first two groups (especially China) seek to route shipments to the US via those in the third group to avoid tariffs.
It sounds like US consumers should brace for higher prices on products from about a dozen countries after April 2. Can you give us a sense of what they export to the US?
Yes. The products affected will include autos from the EU, Mexico, Japan, and South Korea; electronics from China, Mexico, the EU, India, Vietnam, Japan, and South Korea; and consumer goods from China, Mexico, the EU, and Vietnam. That’s just a small sample.
What sort of retaliation should we expect from these countries?
Most countries in the crosshairs of Trump’s trade policies have signaled cautious responses and will seek to either negotiate concessions from the US administration or respond with carefully calibrated measures of their own. China, for example, has already responded to a first round of 10% US tariffs with retaliatory tariffs on liquefied natural gas, coal, farm machinery, and other US products. It has signaled it will respond against any additional US measures as they take effect. Mexico has indicated it will respond with measures targeted at US agricultural goods from Republican-leaning states with the aim of causing pain for producers there that will force the US to the negotiating table. The EU has said it is prepared to respond with proportionate counter-tariffs on US goods but will initially seek a negotiated settlement with Trump.
What product-specific tariffs are expected?
Trump has already announced 25% tariffs on imported automobiles, steel, and aluminum. His administration has announced a probe into trading conditions in the copper sector that is expected to result in tariffs. On April 2, he is expected to launch similar probes for several other sectors – including semiconductors, agriculture, and pharmaceuticals – that would result in tariffs by the end of this year or early next year. Trump has indicated he would like to protect the US agricultural industry from the expected retaliatory measures from US trade partners.
What will be the short- to medium-term impact of these policies?
We are projecting that average US tariff levels will probably rise this year to levels not seen since the 1940s. The resulting price increases for consumers, retaliatory measures against US firms, and general climate of uncertainty are likely to reduce the level of US economic output by 1.5% over the next year or two and cause a 1.5 percentage point increase in inflation. However, economic models are not well-equipped to estimate the impact of mass tariff hikes. We think it could be much greater in an extreme scenario, on the order of a 3% reduction in economic output and a 3 percentage point increase in inflation.
Edited by Jonathan House, Senior Editor at Eurasia Group.