U.S President Donald Trump announced new tariffs as part of his renewed trade law on 2nd April 2025. This raised concerns across global markets and international allies. Dubbed "Liberation Day," the plan imposes a 10% blanket tariff on all imports into the United States, starting April 5th. Specific countries will face even higher tariffs, such as 34% on Chinese goods, 20% on imports from the European Union, and 24% on Japanese products, effective April 9. U.S President Donald Trump announced new tariffs as part of his renewed trade law on 2nd April 2025.

A Deep Dive

Trump cited America’s trade deficit as a “national emergency,” invoking the International Emergency Economic Powers Act of 1977 to justify the tariffs. He argued that these measures are vital for protecting American industries and bringing manufacturing back to U.S. soil. This announcement is raising questions and criticism all around the world. Economists warn that the tariffs will lead to higher prices for consumers and businesses. Analysts estimate the average American household could face an additional $3,800 in annual costs. Inflation is expected to climb above 4.1%, while economic growth may slow. Major corporations such as Walmart, Best Buy, and Volkswagen have responded swiftly. Retailers are preparing for price hikes on essentials, and car manufacturers may add import surcharges. These companies warn that the tariffs will disrupt supply chains and hurt middle-class consumers the most. International reactions have been swift and negative. China condemned the move and promised retaliatory tariffs. Australia, also affected by the 10% baseline tariff, expressed disappointment. Prime Minister Anthony Albanese stated the decision was “not the act of a friend,” though Australia has ruled out retaliatory tariffs for now.

Effects In Australia

The beef industry has been most affected by Trump’s tariff. Beef is Australia’s biggest export to the US. Beef exports to the US is the highest when compared to other countries Australia exports beef to. The effects of the tariff can already be seen with the Australian share market losing up to $57 billion, following Trump’s announcement, which was the highest drop experienced by the share market in eight months.

Many economists note that the direct impact of the tariffs in Australia is likely to be low. Compared to many other countries, Australia only received a 10% tariff rate. The US is also not a huge export market for Australia, with the exception of a few industries, including beef. However, Australia is likely to feel the indirect effect of the tariffs through trade with China and Japan who have been subjected to higher tariffs. These two countries alone accounted for 50% of Australia's goods exports in 2023-24.

Australia will feel the effects should tariffs cause an economic slowdown in any of these countries, particularly China. Analysts have hinted that tariffs hitting the construction and manufacturing sectors in Asia will slow down the demand for Australia’s iron, coal and gas exports. Some economists are worried that these tariffs have the potential to cause a recession globally

Conclusion

Despite the backlash, Trump has doubled down, framing the tariffs as part of a broader effort to "reclaim American economic independence." With elections looming, the move may play well with parts of his base but could lead to long-term damage to global trade relations. As the situation unfolds, countries and corporations alike are bracing for a turbulent economic period driven by rising protectionism.