Liberation Day tariffs

The Liberation Day tariffs, one of a series of tariffs in the second Trump administration, are a broad package of import duties announced by U.S. president Donald Trump on April 2, 2025—a date he called "Liberation Day"—in a White House Rose Garden ceremony. They were implemented via Executive Order 14257, Regulating Imports With a Reciprocal Tariff to Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits, which declared a national emergency over the United States' trade deficit and invoked the International Emergency Economic Powers Act to authorize the tariffs.
The Executive Order imposed a 10% baseline tariff on imports from nearly all countries effective April 5, 2025, with country-specific tariff rates scheduled to begin April 9, 2025. The Trump administration called these measures "reciprocal", asserting they mirrored and counteracted trade barriers faced by U.S. exports. Trade analysts rejected this characterization, noting that the tariffs often exceeded those imposed by foreign countries and included countries with which the U.S. had a trade surplus. Economists argued that the formula used to calculate the "reciprocal" tariffs was overly simplistic with little relation to trade barriers.
The Liberation Day tariffs announcement led to the 2025 stock market crash. In response, the White House suspended the April 9 tariff increases to allow time for negotiation. By July 31, Trump had announced deals with just 8 trading partners: the UK, Vietnam, the Philippines, Indonesia, Japan, South Korea, the EU, and a truce expiring August 12 with China. He ordered country-specific "reciprocal" tariffs to resume on August 7, 2025.
On May 28, 2025, the United States Court of International Trade ruled in a lawsuit that Trump had overstepped his authority in imposing tariffs under the IEEPA and ordered that the Liberation Day tariffs be vacated. The United States Court of Appeals for the Federal Circuit issued a stay while it considered the administration's appeal, allowing the tariffs to remain in effect. Oral arguments were scheduled for July 31, 2025. On August 29, the Federal Circuit Court of Appeals ruled that Trump had exceeded his authority under the IEEPA, but stayed its decision to give the administration time to appeal to the U.S. Supreme Court.

Background

Prior to his Liberation Day announcement, Trump had implemented several tariff policies since returning to office in January 2025, including duties on steel and aluminum imports as well as tariffs targeting China, Canada, and Mexico. The administration had also announced a 25% tariff on imported automobiles and automotive parts scheduled to take effect at midnight on April 3, 2025. These previous measures had already increased the average U.S. tariff rate to approximately 12%, the highest level since World War II according to Deutsche Bank Research.

Country-specific tariffs implemented under IEEPA

Development

In a memo signed February 13, 2025, Trump directed his staff to research both monetary and non-monetary trade barriers imposed by foreign countries against U.S. exports and to develop custom "reciprocal tariffs" to counter and penalize each one. He instructed them to consider factors such as existing tariffs, exchange rates, and trade balances in their analysis. Lutnick said his team would have a plan ready by April 1, 2025. Trump announced that he would unveil the reciprocal tariffs on April 2, 2025, a date he referred to as Liberation Day.
Reuters reported the Trump administration struggled to design reciprocal tariffs because each of the 186 members of the World Customs Organization applied different duties. The administration initially considered dividing all countries into tiers of high, medium, and low trade barriers. Later, Treasury Secretary Scott Bessent and National Economic Council director Kevin Hassett told Fox Business that the administration would focus on the United States' largest trading partners and assign each individualized tariff rates. Hassett stated that "more than 100 countries don't really have any tariffs on us and don't have any non-tariff barriers" and that only "10 to 15 countries" were a concern.
However, on March 30 Trump told reporters, "I don't know who told you 10 or 15", dismissing the idea as a "rumor" and reiterating plans to implement tariffs globally. Although numerous countries attempted to preemptively negotiate deals in the weeks leading up to April 2, no exemptions were granted. The lack of clarity contributed to economic volatility.
Bloomberg News reported Senior Counselor Peter Navarro had urged Trump to adopt either a 25% global import tariff or a "reciprocal" tariff formula based on trade deficits, while Bessent and Hassett supported more nuanced and targeted tariffs. Bessent encouraged using tariffs primarily as a negotiating tool, while Navarro saw them as a means to transform trade relationships. Trump ultimately adopted Navarro's idea of "reciprocal" tariffs.

Announcement

In a White House Rose Garden address on April 2, 2025, Trump declared the day to be Liberation Day, describing it as "one of the most important days in American history" and "our declaration of economic independence". The President signed Executive Order 14257, which declared a "national emergency" to address what he described as a "large and persistent U.S. trade deficit". Trump stated, "We're going to start being smart, and we're going to start being very wealthy again." He said the new policy would boost domestic production, create American jobs, and generate "trillions and trillions of dollars to reduce our taxes and pay down our national debt". Trump characterized the tariff implementation as "kind", saying the U.S. would tariff other countries at half the rate the administration had calculated their trade barriers to be worth.
Trump unveiled a two-tier tariff structure: a baseline 10% tariff applied to imports from all countries not subject to other sanctions, and additional country-specific "reciprocal" tariffs ranging between 11% and 50% for the countries with which the U.S. had the greatest trade deficits. The administration asserted that trade deficits were representative of unfair trade practices, an idea disputed by economists. The 10% baseline tariff would begin at 12:01 a.m. EDT on April 5, 2025, while the higher country-specific rates would commence at 12:01 a.m. EDT on April 9, 2025.
Politico described the measures as "the most significant US protectionist trade action since the 1930s", when Congress passed the Smoot–Hawley Tariff Act. Federal Reserve chairman Jerome Powell described the tariffs, and their likely economic impact, as "significantly larger than expected".
Tariffs on certain goods were excluded. These included all articles subject to , such as books and other informational materials, goods separately impacted by Section 232 tariffs, products from Mexico and Canada compliant with USMCA, except for goods targeted by Section 232 tariffs, imports from countries subject to Column 2 of the HTSUS, which at the time were Cuba, North Korea, Russia, and Belarus. Smartphones, computers and various electronic parts were exempted on April 11. Various agricultural products, including coffee, tea, fruits and beef, were exempted on November 14, 2025.

Region

As of August
1, 2025

As of April
9, 2025

Afghanistan

Formula calculation

Soon after the unveiling, financial journalist James Surowiecki reported that the final "reciprocal tariff" policy appeared to calculate the value of a country's trade barriers by dividing the U.S. trade deficit with the country by the value of U.S. imports from the country, where both the trade deficit and the imports focus only on goods, rather than both goods and services. The "reciprocal" tariff rate Trump imposed was then calculated by dividing that value in half. For example, dividing the US's 2024 trade deficit in goods with China, $295 billion, by the amount that the U.S. imported from China, $439 billion, results in the 67% trade barrier value the U.S. assigned to China: $295bn ÷ $439bn = 0.67 which, as a percentage, is 67%.
The Trump administration later published their trade barrier formula online, which simplified to the same formula. With variable i representing a country, m_i representing imports of goods from that country, and x_i representing exports of goods to that country, the formula given by the White House is as follows:
The Trump administration formula included measures of elasticity set at ε = −4 and φ = 0.25, then multiplied them for ε × φ = −1, which resulted in no change except to make the result positive when ε × φ was multiplied to other parts of the calculation as defined in the formula. Thus, with x_i − m_i being the trade deficit for goods, the formula simplifies to Surowiecki's:
The "discounted" tariff rate is then calculated by dividing the result by 2, making the final formula:
The Trump administration's Office of the United States Trade Representative explained that the tariffs "are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners", aiming to "drive bilateral trade deficits to zero". However, even countries with which the U.S. runs a trade surplus, such as Australia, received the baseline tariff of 10%.

Overestimation of "reciprocity"

The "reciprocal" tariffs are not reciprocal but rather unilateral, in that they vastly overstate tariffs imposed by US trading partners. For example, while the "reciprocal" trade-deficit based formula translates a 39% trade deficit in goods with the EU leads into a 20% tariff, actual tariffs imposed by the EU on US goods average only 3%. Research suggests that publics in core European constituencies are against reciprocal tariffs.