Liberation Day 2.0: The Shocking Shifts and Who Will Feel Them Most

Trump’s Global Tariff Initiative Unveiled

In a dramatic rollout on what was dubbed “Liberation Day,” former President Donald Trump announced a comprehensive set of tariffs that sweep across almost every market on the planet. After a series of pauses and administrative delays, the new tariff regime is finally approaching full enforcement.

Key Highlights of the Tariff Package

• Targets imports from more than 190 countries
• Includes high‑rate duties on consumer goods such as electronics, automobiles, and luxury items
• Imposes substantial duties on raw materials like steel and aluminum
• Strategically places a “phase‑out” schedule that favors domestic producers over foreign competitors
• — and much more

What to Expect as the Tariffs Take Effect

In the coming weeks, importers worldwide will need to start incorporating these tariffs into their cost structures. Trade partners will likely respond with corresponding measures, potentially sparking new geopolitical tensions. Domestic industries that depend heavily on imported inputs could see material shifts in pricing and supply chains.

US Reinstates “Liberation Day” Tariffs, Extending Deadline

After a series of pauses, the United States has announced that the country‑specific tariffs introduced on 2 April will remain in force for an additional seven days, pushing the previous 1 August deadline even further back. While a handful of nations reached negotiated settlements, most countries will see the original US tariff rates reinstated.

Background of the Tariff Initiative

The tariffs were first revealed as part of President Trump’s declaration that the U.S. trade deficit constituted a national emergency. He cited the imbalance between goods flowing into America and American products sold abroad.
Invoking the International Emergency Economic Powers Act (IEEPA), the administration issued executive orders termed “reciprocal tariffs.” These measures aimed to address what was perceived as unfair trade practices and barriers, despite analysts pointing to the strength of the dollar and consumers’ preference for foreign goods as primary drivers of the deficit.

Current Status and Upcoming Reversal

• 7‑day extension: The tariffs will stay active until the new cutoff date.
• Delay of 1 August deadline: The original target for lifting the tariffs has been postponed.

Countries Affected and Tariff Rates

The specific rates vary by nation:

• Myanmar: 44 % tariff.
• Lesotho: 50 % tariff.
• China: 34 % tariff.
• European Union bloc: 20 % tariff.

For nations without a dedicated rate, a standardized 10 % tariff took effect on 5 April, with the full reciprocal tariff regime slated for 9 April.

Impact on Global Trade Flows

Countries such as China and the EU group experienced the most significant shocks, altering the balance of global trade and affecting supply chains across numerous sectors. The imposition of higher tariffs has reshaped import patterns and placed pressure on multinational operations.

Analytical Perspectives

Experts suggest that the U.S. trade deficit stems largely from currency dynamics and consumer demand for overseas products. While the tariffs aim to correct perceived imbalances, their effectiveness remains a subject of debate amid evolving international economic conditions.

First suspension

Overview of the US‑China Trade Tensions

After the U.S. announced a 90‑day suspension of specific reciprocal tariffs—originally set to expire on 9 July—the basic 10% tariff invoked under the IEEPA remained active. The ongoing trade dispute escalated rapidly, with both nations implementing increasingly punitive measures.

Escalating Tariff Actions

• April 9: The United States imposed an additional 50% tariff on Chinese goods, which China mirrored back.
• Subsequent increase: 84% U.S. tariff on Chinese products (excluding an extra 20% fentanyl surcharge).
• Peak escalation: The U.S. raised its tariff to 145% on Chinese imports, inclusive of the fentanyl levy.
• China’s response: A total tariff rate of 125%, with a statement that further U.S. hikes would be ignored.

Official Positions

The Chinese Foreign Ministry cautioned that continued U.S. tariff increases would become economically untenable, labeling them “a joke in the history of the world economy.”

Temporary Resolution

On 12 May, a provisional agreement was reached, cutting tariffs to:

• U.S. levy on Chinese goods: 30%
• Chinese levy on American goods: 10%

Both sides agreed to reassess the situation after a 90‑day period and are now negotiating a comprehensive settlement.

Future Negotiation Outlook

Peter Navarro, Trump’s Trade Counselor, suggested to Time magazine that the U.S. was open to individual bilateral deals, envisioning “90 deals in 90 days”—a target unfulfilled but with several last‑minute agreements secured.

Deals struck so far

Updated US Trade Frameworks and Their Global Impact

UK Secures 10% Baseline with Select Exceptions

The United Kingdom finalized a trade framework with the United States on 16 June, preserving the standard 10% tariff baseline while carving out special provisions for certain sectors. This agreement marks a significant shift away from earlier liberalization ranges.

Vietnam Negotiates for Reduced Tariff Rates

On 2 July, Vietnam reached a consensus that reduced its former 46% tariff level to 20%. The new arrangement excludes goods routed through Vietnam from third‑world sources and destined for the United States, offering a more favorable entry point for exporters.

Thailand and Cambodia Align with the 19% Standard

Both Thailand and Cambodia secured agreements just before the deadline, successfully dropping their tariffs from 36% and 49% respectively down to a 19% rate.

Implications for the EU Amid the Upcoming US Deadline

As the United States edges toward its 1 August tariff deadline, the European Union watches closely. The new trade arrangements promise to prevent tariff escalation but also raise questions about future growth and competition on the global stage.

Second suspension

US Tariff Negotiations Yield Significant Rate Reductions

A series of trade agreements announced in July have led to a substantial easing of tariff rates on imported goods, benefiting several key partners.

Delayed Liberation Day Tariffs

The United States announced a second delay on July 9, postponing the reinstatement of its Liberation Day tariffs until August 1.

Asia-Pacific Settlements

• Indonesia: The tariff rate for Indonesian goods was reduced from 32% to 19%. This move follows a new trade arrangement finalized between the two countries.
• Philippines: A preliminary agreement was reached that will lower the Philippine tariff rate to 19%.
• Japan: At the end of July, Japan secured a trade deal that sees its tariff rate cut from 24% to 15%.
• South Korea: Similarly, South Korea’s tariff was lowered from 25% to 15% as part of a new accord.

South Asian Agreement

With Pakistan, the United States agreed to invest in the development of the country’s oil reserves in exchange for a tariff reduction. Pakistan’s rate will fall from the previous 29% to 19%.

European Union Deal

On July 27, the EU reached an agreement with President Trump, which lowered the tariff rate for EU goods to 15%.

These collective measures demonstrate the United States’ ongoing commitment to fostering trade relationships and creating more affordable market conditions worldwide.

What about pre-Trump trade agreements?

Revisiting the US‑Mexico‑Canada Agreement: Trump’s Trade Moves and Tariff Implications

USMCA’s New Role in North American Trade

The Trump administration’s first priority was to supersede the old North American Free Trade Agreement, resulting in the signing of the US‑Mexico‑Canada Agreement (USMCA). This accord now governs trade among the three nations.

Canada Sets a 35% Tariff on U.S. Imports

On 1 August, Canada is slated to impose a 35 % tariff on goods exported to the United States. White House officials clarified that the higher duty will apply only to items not covered under the USMCA, meaning nearly 90 % of Canadian imports remain tariff‑free.

• USMCA‑covered products stay exempt.
• Non‑USMCA goods face the elevated 35 % rate.
• Canada’s bulk of exports is outside the tariff increase.

Mexico’s Tariff Expectations and Negotiation Window

Mexico had once projected a 30 % tariff on its goods entering the U.S., but President Trump opened a 90‑day negotiation period on Thursday.

Trump posted on Truth Social that a phone conversation with Mexican President María Claudia Sheinbaum was “very successful,” indicating mutual understanding.

• Automobiles from Mexico will face a 25 % tariff.
• Copper, aluminium, and steel are subject to a harsher 50 % duty.
• The 25 % tariff on Mexican goods is purportedly linked to fentanyl trafficking concerns.

Elimination of Non‑Tariff Barriers

Trump announced that Mexico would end its “Non‑Tariff Trade Barriers,” though specific measures were not detailed.

USMCA Protections Remain in Place

Despite the new tariff schedules, several goods continue to be protected under the USMCA framework, sustaining trade for a broad array of products.

Steel, aluminium, copper, Brazil and India

Recent U.S. Tariff Measures Impacting Global Trade

The U.S. administration has intensified trade measures across a range of commodities and nations, largely driven by strategic and political considerations.

Steel and Aluminium

• Universal 50% tariff applied to steel and aluminium products on 4 June.
• UK’s current tariff stands at 25%, with ongoing negotiations that may lead to a reduction.

Copper‑Based Items

• Starting Friday, 30 July, copper semi‑finished products such as rods and sheets are subject to a 50% tariff.
• Copper‑intensive goods—cables, electrical components—face the same rate.

Geopolitical Targets

• India: A 25% tariff announced with an additional, unspecified penalty for importing Russian oil and weapons, despite U.S. sanctions.
• Brazil: A 50% tariff imposed following an executive order that cites Brazil’s policies and prosecution of former President Jair Bolsonaro as an economic emergency.

Legal Foundations and Trade Surplus

• The tariff threat against Brazil, originally announced in a letter to President Luiz Inacio Lula da Silva on 9 July, was grounded in an earlier trade imbalance rationale.
• Despite a U.S. trade surplus of $6.8 billion (€5.8 bn) with Brazil last year, the justification for the tariffs remains contested.

Key Takeaways

• U.S. tariff policy is broad, covering both commodity categories and geopolitical actors.
• Negotiations could reshape the impact on allies such as the UK.
• Legal justifications are being scrutinized against actual trade data.

Russia, anyone?

Trump’s Trade Strategy Toward Russia Tightens Amid Ukraine Conflict

When President Trump first implemented the “Liberation Day” tariff, Russia was notably absent from the list—an omission some interpreted as evidence of a perceived leniency toward President Vladimir Putin. However, lingering sanctions from the prior administration, coupled with Russia’s full‑scale invasion of Ukraine in 2022, have already curtailed trade volumes with Moscow.

Key Moves and Timing

• On July 14, Trump gave Putin a 50‑day window to negotiate a cease‑fire in Ukraine, warning that a failure to comply would trigger a 100% tariff on any country that buys Russian oil and gas.
• During a recent visit to Scotland, Trump hinted that he might reduce this deadline to just 10–12 days, stating, “Because I think I already know the answer what’s going to happen.”

Legislative Support

Republican Senator Lindsey Graham has drafted a congressional bill that, if enacted, would impose a staggering 500% tariff on nations importing Russian gas—including India. This measure underscores the administration’s commitment to isolating Russia economically.

So what happens now?

Updated Tariff Policies Triggered for Nations With No Separate Trade Agreements

Reintroduction of Previous Tariff Levels

Because the earlier tariff suspensions were only temporary, all countries that have not negotiated a distinct trade agreement will see their Liberation Day rates reinstated. This means the special tariff reductions that were temporarily in place are no longer applicable.

Minimum Import Tariff

For nations that do not have a country‑specific rate, the baseline tariff for imports has been set at 10%. This level offers relief to those who were concerned that the baseline could double under new regulations.

Penalty for Trans‑shipped Goods

• The administration has introduced a 40% penalty on goods that are trans‑shipped with the intention of avoiding duties.
• This measure is aimed at curbing loopholes that allow forfeiting tariffs through intermediary shipping routes.

Key Takeaways

• Tariff rates revert to earlier levels for countries lacking separate trade deals.
• Minimum tariff set at 10% for imports where no specific rate is assigned.
• Strong penalty of 40% applied to trans‑shipped goods seeking duty avoidance.