Connect with us

America

Trump and ‘Liberation Day’: Beyond tariffs

Published

on

US President Donald Trump has challenged the global trade order by imposing tariffs on goods imported into the US.

Trump said on Wednesday that a 10% tariff would be imposed on nearly all imports entering the US starting April 5, describing these measures as a way to “liberate” the US economy.

The White House also unveiled sweeping “reciprocal” tariffs on goods from the US’s largest trading partners, targeting a global trading system that, according to Trump, has “ripped off” the United States for decades.

Historically, the term “reciprocal” in trade refers to measures taken by both sides to ensure fairness in bilateral agreements. For much of the past 90 years, this typically involved reducing trade barriers. In the US, the Reciprocal Trade Agreements Act of 1934 signaled the end of an era of US protectionism, enabling the US and partner countries to negotiate lower tariffs on each other’s goods.

Under the new plan, tariffs on goods from China, the world’s largest exporter, will rise to 54%, reflecting an additional 34% tariff imposed by Trump on top of the existing 20% levied earlier this year.

The EU faces tariffs totaling up to 20%, while imports from Japan, a close Washington ally, will be subject to 24% tariffs. UK exports will incur a 10% tariff.

Tough measures on Asian countries

A 10% base tariff applies to imports from all countries. Beyond this, “individualized reciprocal higher tariffs” are planned for the 60 countries identified by the US as the “worst offending” due to their large trade deficits with the US. These reciprocal tariffs will range from 10% to 50%.

The specific tariff rate is calculated based on the White House Council of Economic Advisers’ assessment of the combined tariffs and non-tariff barriers imposed on US goods by a given country. Half of this assessed level will be applied as the reciprocal tariff rate for imports from the 60 designated “worst offending” countries.

Several Southeast Asian export hubs face tariffs approaching 50%. Cambodia is assigned a rate of 49%, Laos 48%, and Vietnam 46%.

Other countries facing tariffs above 40% include Sri Lanka (44%), Madagascar (47%), and Myanmar (44%). Saint Pierre and Miquelon, a small French territory off the coast of Newfoundland, Canada, is subject to a 50% tariff.

The high tariffs targeting several Asian countries are partly attributed to China shifting production to these nations, which then serve as conduits for exporting goods to the US.

Mexico and Canada, despite being frequent targets of Trump’s criticism, will be exempt from these new reciprocal tariffs. However, the existing 25% tariff on goods non-compliant with their 2020 trade agreement with the US remains effective.

The White House stated that cars and auto parts subject to the 25% tariffs announced last week will be exempt from the new reciprocal tariffs.

Bullion, energy resources, and minerals not domestically available in the US are also exempt from reciprocal tariffs. Additionally, semiconductors, pharmaceuticals, copper, and lumber will not be subject to these specific tariffs.

However, this exemption contrasts with previous actions and statements by Trump, who had already announced tariffs on copper and lumber and indicated potential tariffs on pharmaceuticals and computer chips.

Trump declares national emergency

The US President invoked emergency powers to implement the new tariffs. The administration declared a national emergency, citing “national security and economic security concerns arising from conditions reflected by large and persistent annual US goods trade deficits”.

US officials announced that the initial tariffs will take effect shortly. The basic 10% tariff is scheduled to begin at 00:01 on Saturday, April 5, with the higher reciprocal tariffs following at 00:01 on Thursday, April 9.

Negotiating exemptions or reductions might be possible, contingent on Trump’s discretion. The decree announcing the tariffs states that the president “may reduce or limit the scope” of the duties if “any trading partner takes significant steps to correct non-reciprocal trade arrangements and adequately align with the United States on economic and national security matters.”

However, US officials indicated a current focus solely on implementation. A senior White House official told the FT, “Of course countries want to see what they can do for more reciprocal trade. Right now, we’re focused on enacting the tariff regime.”

What is the purpose of tariffs?

Reducing the US trade deficit is a long-standing goal for Trump. In his Rose Garden speech, the president stated that he has advocated for this for over 40 years.

Administration officials attribute the erosion of manufacturing capabilities, wage depression, and the “transferring assets into foreign hands” to the US’s “massive” and “chronic” trade deficits.

Another objective is to compel companies to relocate production to the US. Trump anticipates that businesses will establish plants domestically to circumvent tariffs, thereby creating more jobs.

A US official said, “The goal is to restore American greatness and prosperity for everyday American workers in their communities.”

Correcting “unfair trade practices” is also cited as a goal. White House officials stated that Trump “has been clear for decades about his commitment to correct unfair trade practices by foreign trading partners, both friendly and hostile.”

While not explicitly cited by US officials as a primary justification, the tariffs are expected to generate significant revenue. Officials estimate the duties could bring in “hundreds of billions of dollars in any given year” or “trillions over a 10-year period,” potentially offsetting steep tax cuts.

Tariffs and beyond: A systemic shift

While Trump’s speech centered on tariffs and the potential for trade wars, it signifies the strengthening of a trend originating in his first term and partially maintained under President Joe Biden.

Essentially, Trump’s “protectionist” economic policies stem from the belief that the era of free markets and globalization—often termed the “Washington Consensus”—now disadvantages the US.

Trump said in his speech, “Foreign trade and economic practices have created a national emergency,” arguing that the US has now achieved “economic independence” and that his goal is to bolster the US’s international economic standing and protect its workers.

Trump’s executive order contends that the US’s large, persistent annual trade deficits have hollowed out the manufacturing sector, disincentivized the expansion of advanced domestic manufacturing capacity, weakened critical supply chains, and increased the defense industry’s reliance on foreign adversaries.

Trump emphasized that the trade imbalance has fueled a large and persistent deficit in both industrial and agricultural goods, shifted production overseas, “empowered non-market economies” like China, and ultimately harmed the American middle class and small towns.

The order stated, “These tariffs are intended to address inequities in global trade, bring manufacturing back home and spur economic growth for the American people.”

Trump highlighted the decline in the US share of global manufacturing output, noting it fell to 17.4% in 2023 from 28.4% in 2001. He said, “The decline in manufacturing output has reduced US manufacturing capacity. The need to maintain a robust domestic manufacturing capacity is particularly acute in advanced sectors such as automobiles, shipbuilding, pharmaceuticals, transportation equipment, technology products, machine tools, and basic and fabricated metals, where the loss of capacity could permanently weaken US competitiveness.”

In this context, the presidential order lists the “Golden Rules of the Golden Age” as follows:

— Access to the US market is a privilege, not a right.

— The US will no longer put itself last in international trade matters in exchange for empty promises.

— Reciprocal tariffs were one of the main reasons why Americans voted for President Trump; they were a cornerstone of his campaign from the start.

— Everyone knew that he would push for it as soon as he took office; it was exactly what he promised and it was one of the main reasons why he won the election.

— These tariffs are at the center of President Trump’s plan to reverse the economic damage left by President Biden and put America on the path to a new golden age.

— This plan is part of a broader economic agenda focused on energy competitiveness, tax cuts (including eliminating taxes on tips and Social Security benefits), and deregulation aimed at increasing US prosperity.

Declaration of the bankruptcy of the post-World War II order

He said, “For decades, our country has been looted, pillaged, raped and plundered by friend and foe alike, by nations near and far. Foreign crooks have looted our factories and foreign scavengers have torn apart our once beautiful American dream.”

He also saluted the American steelworkers, autoworkers, farmers and artisans in the audience.

Trump said, “I think this is one of the most important days in American history. This is our declaration of economic independence.” He argued that for years, “hard-working Americans” were sidelined while other nations prospered, but now it was the US’s turn. “Today we stand up for the American worker and finally put America first,” he added.

The President declared in a speech infused with American dream rhetoric, “April 2, 2025 will forever be remembered as the day American industry was reborn, America’s destiny was reclaimed, and we began to make America rich again.”

US embassies issue ultimatums to European companies

Even before the tariff announcement, the Trump administration took steps impacting US trade relations, extending beyond typical commercial diplomacy.

Last week, the Trump administration reportedly attempted to compel European companies to adhere to specific US domestic policies, an action highlighted by a letter sent from the US embassy in France to French businesses.

The letter, sent by the US Embassy in Paris to dozens of major French companies operating in the US, was first reported on Friday by the French business daily Les Echos.

According to reports, the letter stated that Executive Order 14.173, aimed at ending “unlawful discrimination” and restoring “merit” in business, is “equally binding on all suppliers and service providers to the US government,” including French companies, irrespective of their nationality or location of work.

The term “unlawful discrimination,” in the context of the Trump administration’s policy, refers to Diversity, Equity, and Inclusion (DEI) programs, which the administration has moved to dismantle within the US and is now reportedly pressuring foreign companies to abandon.

The letter included a form requesting that affected companies detail their plans for implementing the executive order.

The Financial Times (FT) reported on Friday that US embassies in Belgium and several Eastern European countries sent similar letters to companies in those nations.

The US initiative provoked strong reactions. The French Trade Ministry said in a statement late last week, “US interference in the inclusion policies of French companies is unacceptable.” The ministry asserted that French law, including regulations on inclusion, continues to apply within France.

On Monday morning, French Trade Minister Laurent Saint-Martin expressed his “deep shock” and cautioned against violating French laws and “values.”

Patrick Martin, President of the French business association Medef (Mouvement des entreprises de France), previously stated that abandoning existing inclusion rules was “out of the question.”

Amir Reza-Tofighi, President of the CPME (Confédération des petites et moyennes entreprises), described the move as an “attack on the sovereignty” of France and urged relevant parties to “stand up together” against this US pressure.

The action also drew protests in Belgium. Minister Maxime Prévot called the stance in the US letter “deeply regrettable” and declared that Belgium “will not back down an inch” regarding the principle of social diversity.

Washington’s attempts to compel European nations to adopt specific US regulations are not entirely unprecedented. For years, the US has employed extraterritorial sanctions—coercive measures requiring compliance from companies in third countries to avoid penalties.

What distinguishes this instance, however, is the administration’s attempt to impose domestic regulations—specifically those concerning DEI, which are contentious within the US itself and potentially divisive in Europe—onto European companies.

America

US national debt hits record $40 trillion as borrowing accelerates

Published

on

The US national debt has reached a record $40 trillion as borrowing expanded at a historic pace.

The development has heightened investor concern over the state of US public finances, despite Donald Trump’s pledge to bring spending under control.

Gross federal debt crossed the threshold on Tuesday, according to Treasury Department data published on Wednesday.

Calculations by the Financial Times show that debt climbed by $3 trillion over the past year, registering the fastest rate of increase in history outside the pandemic period.

Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget think tank, said:

“This is like a giant, flashing ‘check engine’ light. It doesn’t mean your engine will melt down tomorrow, but it is a clear sign that things have gotten quite out of hand. And it’s not just the size of the number; it’s the speed at which we’ve reached it.”

The US national debt has surged over the past two decades, climbing from below $6 trillion at the start of the century (about $12 trillion in 2026 dollar terms) as massive public spending during the financial crisis and the Covid-19 pandemic compounded enormous budget deficits.

In the past 10 years alone, the total debt load has doubled. Debt held by the public—a key gauge tracked by markets that excludes intra-governmental holdings—now exceeds $32 trillion, roughly equal to the size of the US economy.

The non-partisan Congressional Budget Office expects debt held by the public to surpass the post-Second World War record of 106% of GDP by the end of the decade and to reach 120% by 2036.

As borrowing increased, investors began demanding a higher premium to hold US bonds.

This has driven interest rates higher, leaving debt servicing costs larger than national defence spending.

The situation has created unease in Washington. On Wednesday, prior to the release of the debt data, the Treasury Department announced it would double its buybacks of long-term government debt in a bid to halt a recent sell-off.

Last week, the US paid its highest borrowing costs since 2001 to sell 30-year bonds.

Wednesday’s 10-year Treasury auction produced the highest yields since 2007 as investors fretted over the scale of the debt.

Ed Yardeni, president of Yardeni Research, said: “That is an awful lot of money being borrowed. It is going to feed on itself with interest expenses. If interest rates rise because of concerns about the high debt load, that will lead to even more interest expense. It’s a vicious cycle.”

Trump returned to office in 2025 promising to rein in “wasteful” government spending.

Treasury Secretary Scott Bessent pledged to reduce the budget deficit to 3% of GDP by the end of Trump’s term.

However, measures to trim spending in some areas were offset by broad tax cuts in the president’s signature 2025 fiscal legislation, the “One Big Beautiful Bill”, which will add more than $4 trillion to the debt by 2034.

Trump also requested an increase of more than 50% in annual defence spending, seeking $1.5 trillion in the largest budget request in US history.

The deficit fell to 5.9% of GDP in 2025 from 6.3% the previous year. The CBO expects the deficit to decline to 5.8% this year. The US national debt comprises years of accumulated deficits compounded by interest charges.

Analysts noted that both US political parties missed opportunities during periods of economic expansion to take significant steps toward curbing spending.

Calculations by the Congressional Joint Economic Committee indicate that over the past year, total national debt grew by roughly $7.9 billion a day, or approximately $91,000 per second.

Budget specialists said they hoped crossing the $40 trillion threshold would spur politicians from both parties to take meaningful steps to bring borrowing back under control.

Michael Peterson, head of the Peterson Foundation, a think tank dedicated to returning debt to a sustainable trajectory, said:

“My hope is that this serves as a national alarm and wake-up call to address our fiscal future. If we keep borrowing this much, we are going to face a day of reckoning in financial markets… People will wake up one day and decide: ‘You know what? I’m more worried about the United States now. I’m going to demand higher interest rates, or I’m going to put my money somewhere else.'”

Continue Reading

America

Independent US oil firms set to sign output deals in Venezuela

Published

on

Several independent US oil producers are expected to sign production contracts with Venezuela’s state-owned oil company in the coming days.

According to sources who spoke to Politico on condition of anonymity because details of the event have not yet been made public, a signing ceremony involving several small US producers and Petróleos de Venezuela (PDVSA) was scheduled to take place in Houston on Tuesday (18 August) evening.

One source said Venezuela’s oil minister and the head of PDVSA’s exploration division were scheduled to attend the ceremony. Another source added that the event could be postponed until Wednesday morning.

The White House, which did not immediately respond to a request for comment, was not expected to be officially involved in Tuesday’s ceremony.

However, the development follows a visit by senior officials to Caracas in late April, where they signed memorandums of understanding that established the framework for formal production agreements in the country, which holds some of the world’s largest oil reserves.

Despite the tailwind provided by high crude prices, negotiations had stalled over key details such as dispute resolution, while officials in Caracas contended with two devastating earthquakes in June that claimed thousands of lives.

Venezuela’s interim president, Delcy Rodríguez, announced new regulations last month that offer more favourable fiscal terms to international oil companies.

According to an industry source close to the negotiations, the signing of the contracts comes after the Trump administration renewed pressure on Rodríguez to ensure PDVSA concludes agreements with American firms.

The source said these efforts included outreach by Secretary of State Marco Rubio to discuss how increased oil revenues could assist the country following the devastating earthquake earlier this summer.

The source added:

“Delcy reached a renewed awareness that increased oil production is the way to rebuild after the earthquakes and to achieve what her government wants to do for the people suffering from the earthquakes.”

David Goldwyn, president of the international energy consultancy Goldwyn Global Strategies, said investments from independent oil producers and boosting output from existing fields would serve as the “primary source of new oil growth for the next few years” for Venezuela.

“While the oil majors are trying to buy time to see how the political situation clarifies and whether they can cherry-pick the best assets, independent companies can de-risk their projects in the short term,” Goldwyn said.

However, Goldwyn noted that these investments would add no more than 300,000 barrels per day to the country’s oil production over the next year, falling far short of the multi-million-barrel increase that officials in Caracas and Washington wish to see.

“Until the framework improves, electricity is restored, and the political picture becomes clear, all we will see is incremental production growth,” the strategist said.

Continue Reading

America

US-Brazil rift widens over proposed sanctions and trade tariffs

Published

on

Diplomatic tensions between the two countries remain at a peak as the US government considers new sanctions targeting a judge on Brazil’s Supreme Court.

According to sources familiar with the matter who spoke to the Financial Times (FT), the Trump administration is evaluating new measures against Justice Alexandre de Moraes, whom it sanctioned last year on human rights grounds before subsequently rescinding that decision.

Washington’s renewed focus on the magistrate threatens to widen the rift between Brazil and the US across trade and political spheres, casting a shadow over upcoming elections in Latin America’s largest nation.

A little over a year ago, De Moraes was subjected to sanctions under the Global Magnitsky Act. US Treasury Secretary Scott Bessent accused him at the time of engaging in a “repressive censorship campaign, arbitrary detentions that violate human rights, and politicized prosecutions,” including measures directed at former Brazilian President Jair Bolsonaro.

Bolsonaro, an ally of Donald Trump, was sentenced last year to 27 years in prison for plotting a coup.

However, sanctions targeting the judge, his wife, and a company owned by his family were lifted in December following a meeting and phone conversations between Trump and his Brazilian counterpart, Luiz Inacio Lula da Silva.

According to a source familiar with the matter who requested anonymity, US interest in De Moraes was revived partly due to a case that ignited a debate over press freedom in Brazil.

The judge authorized police raids against a journalist and two sources as part of an investigation into media coverage concerning a Supreme Court justice and his family.

De Moraes defended the action, arguing that the information in question had been illegally obtained and disclosed, thereby endangering the safety of the justice’s family.

The judge gained global prominence several years ago following a public conflict with Elon Musk, which briefly led to the billionaire’s X platform being blocked in Brazil.

Supporters say he “helped protect Brazilian democracy against a wave of misinformation.”

However, critics, including the Trump administration, view him as violating free speech rights.

“He went after the president’s supporters. Not just Elon Musk, but MAGA supporters in Brazil as well. Even if we want to build good relations with Brazil, it is clear that this man is an adversary,” said a person familiar with the US government’s thinking.

Another person stated that the reimposition of Magnitsky sanctions is “under evaluation,” noting that such sanctions entail the freezing of US-based assets and a prohibition on American companies and individuals conducting business with targeted parties.

While it remains unclear whether or when a decision will be reached, any such move would intensify an escalating retaliatory spiral between the two most populous countries in the Americas.

Tensions initially erupted more than a year ago when Trump imposed a 50% tariff on Brazil while demanding that prosecution proceedings against Bolsonaro be dropped.

That tariff was subsequently invalidated by the US Supreme Court.

A brief period of de-escalation since then has drawn to a close, with the US applying a 25% import tariff on numerous Brazilian products in July.

Last month, Brazil denied entry to two Trump envoys over concerns regarding potential interference in its upcoming October elections. Washington rejects those allegations.

Lula, who is seeking re-election for a fourth presidential term, suggested that the US might act to support his main opponent, Senator Flavio Bolsonaro, the jailed former leader’s son.

The 80-year-old president has also engaged in a sharp public exchange of words with US Secretary of State Marco Rubio.

On Sunday, thousands of supporters gathered to welcome Lula at a stadium in Sao Bernardo do Campo, an industrial suburb of Sao Paulo, for the official launch of his election campaign.

Lula originally achieved prominence in the area during the late 1970s as a union leader heading metalworkers’ strikes.

Speaking at the venue, Lula said, “I thank the working men and women of this country who believed that someone like themselves could achieve more than someone different from them. As long as I am alive, I will not stop fighting, and I will not allow the right [to prevail].”

Continue Reading

MOST READ

Turkey