On April 2, President Donald Trump is set to captivate attention with his announcement regarding what he has dubbed “Liberation Day.” This significant reveal is anticipated to introduce a comprehensive array of reciprocal tariffs, imposing taxes on imported goods that mirror the rates applied to U.S. exports.
Trump claims that these tariffs will invigorate domestic job markets and entice businesses to bring their operations back to the United States. However, analysts caution that such measures could jeopardize existing trade alliances and inflate costs for American consumers.
“This could initiate a global trade conflict. Ultimately, it may not be about ‘America first,’ but rather ‘America alone,’” remarked Şebnem Kalemli-Özcan, an economics professor at Brown University, in a conversation with TIME. “Other countries might think twice before doing business with the U.S.”
Typically, when companies encounter tariffs, they tend to pass those expenses onto consumers. For example, costs for electronics could rise by nearly 10% due to current tariffs, as noted by Budget Lab. Now, a wider range of products—from clothing to wine—could also experience price hikes.
Studies show that low- and middle-income families will feel the brunt of these tariffs. Experts highlight that many households may find it challenging to cope with the sudden increase in prices.
The upcoming tariffs follow Trump’s signing of a presidential memorandum in February, aimed at promoting fairness in U.S. trade practices. “We are moving away from a history of being taken advantage of. This initiative will prioritize the American worker, enhance our industrial competitiveness, reduce the trade deficit, and bolster both our economic and national security,” states a fact sheet from the White House. These trade measures are part of a broader strategy by the Administration to secure funding to counterbalance tax breaks for the wealthiest Americans.
However, Kalemli-Özcan argues that relying solely on tariffs won’t fix the trade deficit. She believes that such policies could isolate U.S. companies, limiting their access to international innovations and technological progress. Without supportive policies for domestic manufacturing, industries may encounter significant disruptions. “Creating a completely new industry and scaling it to meet U.S. consumer demand could take a decade,” she points out. “By then, economic dynamics might be stifled, leading to a sluggish economy.”
While specifics of the new reciprocal tariffs remain ambiguous, several potential impacts on consumers are already evident.
Even before the new tariffs are unveiled, China, the U.S.’s largest trading partner, is facing a tariff increase to 20%, up from 10% earlier in February. During his campaign, Trump hinted at a potential tariff rate exceeding 60% on all imports from China. According to estimates from the Committee for a Responsible Federal Budget, such a tax could lead to a dramatic reduction in U.S. revenue, possibly slashing imports from China by around 85%. Given that China is a primary supplier of goods to the U.S.—including electronics and batteries—this could lead to higher prices for these items.
In retaliation, China has placed a 15% tax on American agricultural products like chicken and wheat, along with a 10% tariff on soybeans, pork, and fruits. Furthermore, several U.S. companies have reportedly been restricted from operating within China, as reported by the New York Times. These actions pose a threat to American farmers, as local suppliers in China may seek alternative sources. “The U.S. does not possess all the leverage in this situation,” notes Kalemli-Özcan. Chinese traders can easily turn to other nations for their fruit and poultry needs, while American farmers might struggle to find new buyers.
Trump has indicated that he might consider lowering tariffs on China as a bargaining chip concerning the sale of TikTok, which is required to divest from its parent company ByteDance and secure a U.S.-based buyer by April 5.
Additionally, Mexico and Canada, two of the U.S.’s major trading partners and historically close allies, are facing a 25% tariff on all goods.
According to analyses by the Budget Lab, grocery prices for fresh produce in the U.S. could see an uptick of 2.9%. This increase would particularly impact avocados, 90% of which are imported from Mexico. Moreover, prior to the announcement of the 25% auto tariff, projections indicated that motor vehicle prices for consumers could soar by 6.1%.
Ultimately, both consumers and businesses are navigating a landscape of uncertainty as the Administration continues to implement fluctuating tariff policies. “These uncertainties convey a clear message to consumers: ‘don’t spend,’ and to businesses: ‘cut back on investment… refrain from hiring new employees,’ due to the unpredictable outlook,” explains Kalemli-Özcan. While a recession may not be an immediate result of these tariffs, she anticipates a noticeable “slowdown in economic growth” as a consequence of such policies.
