Trump’s ‘Liberation Day’ is a trillion-dollar promise that can’t all be true

Washington: In a day or two, US President Donald Trump and his cabinet secretaries will unveil their plans for a new wave of tariffs on America’s friends and foes. The occasion, which Trump has for weeks called “Liberation Day”, will be marked by a ceremony of sorts in the White House Rose Garden.

Despite the long run-up to this announcement, there is precious little certainty about what Trump will reveal. We know there will be “reciprocal tariffs” targeting the countries that maintain duties on imports from the United States. We know the administration has its eye on the so-called “dirty 15” nations with which the US has large and persistent trade deficits.

Trump casually told reporters in the Oval Office he had “settled” his tariff decisions. Credit: Artwork: Matthew Absalom-Wong

And we know that non-tariff trade barriers, such as Australia’s ban on importing uncooked American beef, are also in the sights of Trump’s trade and economic advisers.

But how that shakes out on April 2 is anyone’s guess, including those closest to the president.

“I can’t give you any forward-looking guidance on what’s going to happen this week,” White House National Economic Council director Kevin Hassett said on Fox News. “The president has got a heck of a lot of analysis before him, and he’s going to make the right choice, I’m sure.”

In other words, TBA. Except on Monday, Trump casually told reporters in the Oval Office he had “settled” his tariff decisions – a while ago, in fact – in remarks that reportedly caught some White House aides off guard.

President Donald Trump speaks to reporters before signing an executive order in the Oval Office.Credit: AP

Meanwhile, Trump’s senior trade counsellor, Peter Navarro, was raising the curtain on a tariff regime so consequential it would lead to a new industrial golden age. In total, the tariffs would raise $US600 billion ($960 billion) a year, he told Fox News. They would enable broad tax cuts for working Americans while reviving manufacturing, providing jobs and protecting national security by ensuring the US didn’t rely on foreign products. Is there anything they can’t do?

“Tariffs are great for America, and tariffs will make America great again,” Navarro said. “Trust in Trump. We have the example from the first term ... All we got out of that was prosperity and price stability.”

Except it can’t all be true. The tariffs can’t simultaneously bring back manufacturing and make the US self-sufficient while also raising so much revenue that Congress can start doing away with income tax.

And Americans aren’t seeing it through Trump and Navarro’s rose-coloured glasses. Consumer confidence is plummeting, polls show people want the president to focus on lowering prices, not tariffs, and US markets had their worst start to a year since 2022.

White House press secretary Karoline Leavitt said Trump didn’t care about the sell-off.

“The president has always said the stockmarket is a snapshot of a moment in time, and he’s doing what’s best for Main Street, and Wall Street will work out just fine.”

Economists are not persuaded. Steven Hamilton, a former Australian Treasury official turned economics professor at George Washington University, said he had no doubt Americans would be worse off.

“Tariffs will predominantly be paid by American consumers and workers in higher prices and lower wages,” he said. “And the revenue the tariffs raise is relatively modest, so will finance only modest tax relief.”

Michael Strain, director of economic policy studies at the American Enterprise Institute, said the results of Trump’s first-term tariff policies showed the touted effects never materialised.

Donald Trump says he has “settled” his tariff decisions – a while ago, in fact – in remarks that reportedly caught some White House aides off guard.Credit: AP

“Trump’s trade war will fail at its goals of reviving domestic manufacturing employment, boosting output in the manufacturing sector, and reducing the trade deficit,” Strain wrote on Monday in the US.

Of course, there are other nationalistic and geopolitical goals at play here, as Kevin Roberts, president of the conservative Heritage Foundation, laid out in a thread on X.

One was to “level the playing field” by forcing other countries, including US friends and allies, to drop their tariffs, foreign ownership restrictions, labelling laws and other pieces of red tape.

Another was to decouple the US economy from China “and presents our allies with a clear choice: develop partnerships with the US and get the many benefits that come, or side with China and face US tariffs”.

Trump and his team have greater resolve this time around, buoyed by the emphatic election win and the key economic indicators from Trump’s first term. They are determined to be bolder, go further and move faster.

But at some stage they may have to face reality. As big and important as the US is, it doesn’t hold all the cards. And if prices rise and the economy slows, “Liberation Day” will come to look more like a date with disaster.

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