.webp)
Wall Street and even some White House advisers are unsure exactly what trade policy will be announced on "Liberation Day."
Yet one plan that's been floated is a 20% universal tariff on US imports. That would be a massive escalation in the trade war.
Moody's economist Mark Zandi told me a 20% universal tariff and full retaliation from other nations would be a "worst-case scenario" likely to set off a US recession that sends the unemployment rate to 7%.
But that's why Zandi thinks the Trump administration will stop short of such an aggressive move.
Investors and CEOs are hoping "Liberation Day" brings much-needed clarity about where tariffs are going.
As the trade wars launched by U.S. President Donald Trump continue to escalate, all eyes are on Wednesday.
Trump has repeatedly called April 2 “Liberation Day,” with promises to roll out a set of tariffs, or taxes on imports from other countries, that he says will free the U.S. from a reliance on foreign goods. To do this, Trump has said he’ll impose “reciprocal” tariffs to match the duties that other countries charge on U.S. products.
But a lot remains unknown about how these levies will actually be implemented. White House press secretary Karoline Leavitt said Monday that Trump would unveil his plans to place reciprocal tariffs on nearly all American trading partners on Wednesday, but maintained that the details are up to the president to announce.
Since taking office just months ago, Trump has proven to be aggressive with tariff threats, all while creating a sense of whiplash through on-again, off-again trade actions. And we may see more delays or confusion this week.
.webp)
Trump has argued that tariffs protect U.S. industries from unfair foreign competition, raise money for the federal government, and provide leverage to demand concessions from other countries. But economists stress that broad tariffs at the rates suggested by Trump could backfire.
Tariffs typically trickle down to the consumer through higher prices, and businesses worldwide also have a lot to lose if their costs rise and their sales fall. Import taxes already in effect, coupled with uncertainty around future trade actions and possible retaliations, have already roiled financial markets and lowered consumer confidence while enveloping many with questions that could delay hiring and investment.
Here’s what you need to know.
What will happen on April 2?
Details around Trump’s plans remain uncertain. Reciprocal tariffs could take the form of product-by-product duties, for example, or broader “averages” imposed across all goods from each country — or perhaps something else entirely. The rates could reflect what other countries charge as well as their value-added taxes and subsidies to domestic companies.
White House trade adviser Peter Navarro told “Fox News Sunday” that the tariffs could raise $600 billion annually, which would imply an average rate of 20%.
Trump has talked about taxing the European Union, South Korea, Brazil, and India, among other countries, through these levies. On Monday, Leavitt said Trump had been presented with several proposals by his advisers. She added that the president would make a final decision, but right now was not contemplating any country-wide exemptions from the tariffs.
Previously delayed import taxes could take effect very soon. Trump’s month-long delay for many goods from Canada and Mexico, for example, is set to elapse in early April. Earlier this month, Trump wrote on his social media platform Truth Social that the extension granted for Mexican imports covered by the U.S.-Mexico-Canada Agreement runs through April 2. But further confirmation around a specific date has not been issued since.
Which of Trump’s tariffs are about to start?
Trump has said he will place a 25% tariff on all imports from any country that buys oil or gas from Venezuela, which includes the U.S. itself, starting Wednesday — in addition to imposing new tariffs on the South American country.
His 25% tariffs on auto imports will start being collected Thursday, with taxes on fully-imported cars kicking off at midnight. The tariffs are set to expand to applicable auto parts in the following weeks, through May 3.
The White House says it expects to raise $100 billion in revenue annually from these new duties, but economists stress this trade action will upend the auto industry’s global supply chain and lead to higher prices for consumers.
Which tariffs have already gone into effect?
Trump imposed a 10% tariff on all Chinese imports beginning Feb. 4, a levy he later doubled to 20% from March 4 onward. And China has hit back with retaliatory tariffs covering a range of U.S. goods, including a 15% tariff on coal and liquefied natural gas products and a 10% tariff on crude oil from the U.S. that took effect Feb 10. China also imposed tariffs of up to 15% on key U.S. farm exports starting March 10.
Trump’s expanded steel and aluminum tariffs went into effect earlier this month, too. Both metals are now taxed at 25% across the board, with Trump’s order to remove steel exemptions and raise aluminum’s levy from his previously-imposed 2018 import taxes taking effect March 12.
Canada and Mexico, America’s two largest trading partners, have also faced steep tariffs. Earlier this month, Trump implemented a partial, month-long delay of his 25% tariffs on both countries, delaying taxes for auto-related imports as well as goods that comply with the 2020 US-Mexico-Canada Agreement until early April.
But other imports are still levied, as well as a lower 10% duty on potash and Canadian energy products. In response to these tariffs, as well as the new steel and aluminum import taxes, Canada has rolled out a series of countermeasures amounting to billions of dollars on U.S. goods. Mexico, meanwhile, has yet to formally impose new levies — signaling it may still hope to de-escalate the trade war, although the country previously promised retaliation to Trump’s actions.
Can we expect additional tariffs down the road?
Even more tariffs from Trump are likely, with the president also threatening import taxes on products like copper, lumber, pharmaceutical drugs and computer chips.
And many countries have promised retaliatory measures — if not already imposed them, like Canada. Trump has said he won’t negotiate with other countries on Wednesday’s tariffs until after they’re imposed, though he has said his 25% taxes on auto imports would be permanent.
In response to Trump’s steel and aluminum tariffs, the European Union announced measures on U.S. goods worth some 26 billion euros ($28 billion) — to target steel and aluminum products, but also American beef, poultry, bourbon, motorcycles, peanut butter, and jeans. The 27-member bloc had intended to roll out this retaliatory trade action in two phases, on Tuesday and April 13, but later said it would delay it until mid-April, without giving a specific date.
We’ll potentially see more retaliatory announcements this week, particularly if Trump confirms more details of sweeping reciprocal tariffs on Wednesday.
_________
Republican candidates are projected to win two special elections in Florida on Tuesday, according to U.S. media organizations, boosting Republicans' slim majority in the U.S. House of Representatives by filling vacancies created by President Donald Trump's picks for cabinet posts.
FLORIDA'S FIRST DISTRICT
FLORIDA'S SIXTH DISTRICT
The major car companies say sales rose sharply in March, with most reporting double-digit gains. For some companies, the strong performance last month helped make up for a sluggish start to the year.
Automakers sold nearly 1.6 million vehicles in the U.S. in March, up 13.6%. That brought total sales for the first quarter to more than 3.9 million vehicles, Motorintelligence.com said Tuesday. Almost all automakers saw a surge in sales of electric vehicles.
What future months hold for the automakers is uncertain. President Donald Trump announced 25% tariffs on auto imports that go into effect on April 3. The tariffs are set to expand to applicable auto parts in the following weeks, through May 3. The tax hike means automakers could face higher costs and lower sales, though Trump argues that the tariffs will lead to more factories opening in the United States.
Auto industry analyst Sam Abuelsamid at Telemetry Insight said expectations were that the March numbers would be higher due to some pre-buying ahead of the imposition of tariffs, although the pre-buying was likely “limited to some degree by affordability and continuing high interest rates.”
Here’s a look at the latest results:
General Motors
— Overall U.S. sales rose 17% during the first quarter on strong sales of full-size pickups and SUVs.
— Chevrolet sales rose 14% during the quarter, making it the brand’s best quarter since 2019.
— GMC sales rose 18% for the brand’s best quarter ever, with electric vehicle sales nearly tripling.
Ford Motor
— Total sales rose 10% in March as strong sales of the F-150 pickup and electric vehicles helped offset a drop in sales of SUVs.
— Total sales fell 1% for the first quarter due to fewer sales to rental car companies and the discontinuation of two models.
— Sales of all-electric and hybrid vehicles increased and made up about 15% of total sales for the first quarter.
Toyota
— U.S. sales for Toyota Motor North America rose 7.7% in March.
— Electric vehicle sales rose 44.1% in March and represented nearly half of the overall sales volume for the month.
— Total sales for Toyota Motor North America rose 0.9% during the first quarter.
Honda
— Total sales for American Honda rose 13.2% in March as the company’s light trucks notched their best month of sales.
— Electrified vehicle sales surged 89.1% in March and made up nearly a third of all vehicle sales.
— Total sales rose 5.3% during the first quarter, as a surge in truck sales offset a drop in car sales.
Nissan
— Total sales rose 5.7% in the first quarter, boosted by gains for the Sentra sedan and the Kicks compact crossover.
— Sales of the Leaf electric vehicle doubled in the quarter.
Hyundai
— Total sales for Hyundai Motor America rose 13% in March, led by sales of the Tucson and Santa FE SUVs and the Elantra Sedan.
— Total sales for the first quarter rose 10%.
— First-quarter sales of the company’s hybrid-electric vehicles jumped 68%.
KIA
— Kia America said sales rose 13.1% in March and 10.7% for the first quarter.
Gadgets are sold without batteries. Toys are sold in slimmed-down boxes or no packaging at all. More household goods that shoppers need to assemble themselves.
These are some of the ways consumer product companies are retooling their wares to reduce costs and avoid raising prices as President Donald Trump levies new import taxes on key trading partners as well as some materials used by American manufacturers.
The economic environment in which the president has imposed, threatened, and occasionally postponed repeated rounds of tariffs is more precarious than during his first term. U.S. consumers are feeling tapped out after several years of inflation. Businesses say tariffs add to their expenses and eat into their profits, but they are wary of losing sales if they try to pass all of the increase on to customers.
Instead, some companies are exploring cost-cutting options, both ones that consumers likely would notice in time — remember “shrinkflation?” — and ones that exist too far down the supply chain for them to see. The changes may help minimize price increase, yet won’t be enough in every case to offset them completely.
These are some of the strategies retailers and brands have in mind:
A kink in the supply chain:
After putting an extra 20% tariff on all goods from China, as well as a 25% tariff on imported steel, aluminum, and automobiles, Trump said he would announce on Wednesday the targets of “reciprocal tariffs” that mirror the taxes all other nations apply to certain U.S. exports.
He argues the tariffs will spur domestic manufacturing, among other goals.
Also on the horizon: twice-delayed tariffs on most goods from Canada and Mexico, and duties on copper, lumber and pharmaceutical drugs.
Kimberly Kirkendall, president of supply-chain consulting firm International Resource Development, has told clients — U.S. makers of shelving, home good, and food products — that given all the uncertainty, this is not the time for long-term moves like seeking factories outside of China.
She encouraged them to focus on the short term, particularly the need to scrutinize product lines from every angle for possible savings.
“You’ve got to collaborate and work together with your suppliers in this situation to be able to bring costs down,” Kirkendall said.
Sourcing concerns are not only a worry for big companies that rely on Chinese manufacturers. Sasha Iglehart, founder of a small online clothing company called Shirt Story, has a collection of upcycled men’s shirts that sell for around $235. She said she typically gets her vintage buttons from an Austrian supplier and knows Trump has talked about taxing goods from the European Union.
“I will continue to look for local vendors and collectors here in the States as back up,” said Iglehart, whose company is based in Connecticut.
Reworking a product
For many companies, evaluating which components or details they can remove from their products or replace with less expensive ones is the go-to move for absorbing the potential financial hit from tariffs.
Los Angeles-based toy company Abacus Brands Inc., which designs science kits and other educational toys, has most of its products made in China. By using slightly thinner paper in an 80-page project book that comes with two of its kits, the company expects to avert a $10 retail price increase, President Steve Rad said.
“Three or 4 cents here,” Rad said. “Seven or 6 cents there. Two more pennies over there. All of a sudden, you’ve made up the difference.”
Aurora World Inc., known for its plush pets and toy vehicles, is looking at using fewer paint colors as a way to counteract tariff costs, according to Gabe Higa, managing director of the California company’s toy division. All of Aurora World’s toys come from factories in China.
“This is something that makes it a little bit simpler so that there’s less manual labor involved or less material cost,” Higa said. “(It) doesn’t have a lot of incremental value, so it’s easy to take away.”
The company still may have to raise prices as long as the new tariffs are in effect, he said.
Economy packaging:
Tweaking or reducing product packaging is another area where importers may cut back and carries the advantage of possibly appealing to eco-conscious customers.
Basic Fun CEO Jay Foreman, whose company markets classic toys like Tonka trucks, Lincoln Logs, and Care Bears, said he is presenting retailers with three different packaging options and asking them to decide which ones they prefer for the trucks and some other products that will be in stores next spring.
The first is the current packaging, which consists of a box with a big open window that lets customers see what’s inside. The second option: no box, just a tray attached to the bottom ofthe toys to hold them in place on shelves. The third: unwrapped but affixed with a simple paper price tag that features brand information.
The second-tier packaging would reduce the toy company’s cost per item by $1.25, and the package-free version would yield savings of $1.75, Foreman said. Both would diminish the appeal of the products and would not come close to canceling out the tariff on goods made in China, Foreman said.
He said he would make pricing decisions later this week after Trump provides details about his planned reciprocal tariffs.
To further reduce its production costs, Abacus Brands is thinking of switching from plastic to cardboard for the package inserts that keep toy parts in place. Cardboard trays cost 7 cents per unit compared to 30 cents for the plastic version, according to Rad.
The change requires finding a new factory to make the inserts, a move that did not make financial sense before now, he said. The various tariff-related modifications should be effective for fall and holiday deliveries to stores, Rad said.
“The compromises we’re making are things that do not matter to the consumer,” he said.
Forget the extras
Shoppers will likely have to assemble more of their products at home as companies look to reduce shipping costs, according to Kirkendall of International Resource Development.
One of her clients manufactures self-watering planters that are made in China. The product is undergoing a redesign so it can be shipped as separate nesting components instead of fully assembled.
Companies also are reevaluating the pieces of their products that are essential or extra. Chris Bajda, managing partner at online wedding gift retailer Groomsday, said accessories like batteries and decorative gift boxes may end up in the latter category.
“We now carefully assess what’s truly necessary and avoid including items that don’t serve a functional purpose for the customer,” Bajda said.
The return of shrinkflation?
Reducing the size or weight of products without lowering prices proliferated as a business practice from 2021 through 2024 as companies grappled with rising costs for ingredients, packaging, labor, and transportation.
Edgar Dworsky, a consumer advocate and former assistant attorney general in Massachusetts, suspects the makers of consumer goods will embrace shrinkflation again to hide costs given the blast of new tariffs. The additional import tax on Canadian soft lumber, for example, might show up in smaller toilet paper rolls, he said.
“Shrinkflation has been a little quiet” in the last few months, Dworksy said. “But I would expect to see both price increases and product shrinkage.”
The head of Meta’s artificial intelligence research division said she plans to step down, vacating a high-profile position at a time of intense competition in the development of AI technology.
Joelle Pineau, Meta’s vice president for AI research, said Tuesday she is leaving at the end of May after eight years with the company.
“Today, as the world undergoes significant change, as the race for AI accelerates, and as Meta prepares for its next chapter, it is time to create space for others to pursue the work,” she wrote in a social media post.
Meta — the parent company of Facebook and Instagram — didn’t immediately respond to an emailed request for comment about the move. Pineau didn’t announce a replacement.
Based in Montreal, where she is also a computer science professor at McGill University, Pineau has been the face of Meta’s “open-source” approach to building AI systems, such as its flagship large language model called Llama, in which core components are publicly released for others to use or modify.
Her announcement comes ahead of the company’s debut of a new LlamaCon AI conference on April 29.
In 2023, she began directing Meta’s AI research division, formerly known as Facebook AI Research, which had been founded a decade earlier by a group that included pioneering AI researcher Yann LeCun. LeCun stepped down as the group’s director in 2018 but remains Meta’s chief AI scientist.
Democratic U.S. Senator Cory Booker accused President Donald Trump of "recklessly" challenging the nation's democratic institutions in a marathon speech that broke a nearly seven-decade record on Tuesday for length.
'TAKE RISKS'
Analysts have slashed Tesla delivery estimates in recent weeks as Tesla continues to navigate a choppy first quarter, with consumer backlash, production pauses and signs of low shipment and sales slowdowns overseas.
Tesla executives have said they expect the EV maker will return to growth in 2025, after the company reported its first annual slump in sales in over a decade.
Tomorrow, the EV maker is expected to report its much-anticipated Q1 delivery and production numbers, which will show just how uphill that battle could be.