President Trump proclaimed that the “operation is over” and “the patient lived” as his raft of foreign auto tariffs began taking effect and a baseline import tax against nearly every country will get the greenlight April 5 — before the stock market took a nosedive Thursday morning.
“The operation is over!” Trump, 78, declared Thursday morning on Truth Social. “The patient lived, and is healing. The prognosis is that the patient will be far stronger, bigger, better, and more resilient than ever before. Make America great again!!!”
As part of his so-called “Liberation Day” on Wednesday, Trump had announced a tariff of 10% and customized rates against virtually every US trading partner to be implemented on Saturday, except ones that have been sanctioned and a few that were previously targeted.
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There was also a 25% tariff on vehicles not assembled in the US that took effect Thursday. Further tariffs on auto parts are scheduled to start May 3.
The president has long called for deploying tariffs to revive domestic manufacturing and reindustrialize the US. Critics fear that the large tariffs could cause prices to spike for everyday consumers and hamper economic growth.
Markets reeled after the opening bell Thursday, with the Dow Jones cratering 1,227 points or 2.9% as of 10 am ET, while the S&P 500 dropped 205 points or 3.6% and the Nasdaq plummeted 811 points or 4.6%.
Top Trump administration officials have acknowledged that there will likely be some short-term pain but have argued that sacrifice will lead to an economic renasiance in the long run.
“This is the reordering of fair trade,” Commerce Secretary Howard Lutnick told CNBC’s “Squawk Box” Thursday morning. “It’s about those non-tariff trade barriers. That’s what we are addressing.”
The batch of tariffs that Trump claims are “reciprocal” was largely customized against countries based on the US trade deficit with them. However, several countries, such as Australia, where the US has a trade surplus, were still hit with the baseline 10% tariff.
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Some of the tariffs even hit largely uninhabited places such as Heard Island and McDonald Islands, but White House officials insisted that’s because they’re Australian territories.
“I expect most countries to start to really examine their trade policy towards the United States of America, and stop picking on us,” Lutnick continued on CNBC. “Stop saying that we can’t sell our corn to India, stop saying that we can’t sell our beef anywhere. Just stop treating us so poorly.”
“Let’s go try to figure out ways for the world to treat us more fairly and more properly.”
Trump's sweeping tariffs explained
- A new 10% baseline rate and harsher “reciprocal” levies will impact dozens of countries, including key allies such as European Union members, Japan and Israel.
- Online Chinese retailers, such as Temu and Shein, are no longer exempt from tariffs, due to the closing of a trade loophole on de minimus goods.
- A 25% tariff has been issued on foreign-made cars, which impacts roughly half of all vehicles sold in America.
- Following Trump’s “Liberation Day,” the Dow plunged more than 1,000 points over fears of an all-out trade war.
Worrying economists is the risk of sparking a global trade war against the US, where countries get locked into a vicious cycle of increasing trade barriers with other in a spiral of retaliatory measures.
“My advice to every country right now is: Do not retaliate. Sit back, take it in, let’s see how it goes. Because if you retaliate, there will be escalation. If you don’t retaliate, this is the high-water mark,” Treasury Secretary Scott Bessent told Fox News’ Bret Baier on “Special Report” Wednesday.
Last year, the US imported $4.1 trillion worth of goods and services while exporting $3.2 trillion, according to data from the Commerce Department.
For context, US gross domestic product hovered around $29 trillion.
Various estimates show prices soaring for consumers. For example, financial services company Wedbush has estimated that the fallout from Trump’s prior tariffs on automobiles will cause prices to jump between $5,000 and $10,000.
But Lutnick argued that by protecting US industry via the tariffs, there will be a surge in construction on American plants and a widespread effort by American companies to make their products back home.
“People are going to start building factories right now, and that means all that construction work begins right now. That starts to employ Americans today,” Lutnick promised on “CBS Mornings” Thursday. “You’re going to see employment leaping starting today.”
Trump has been working to complement his protectionism with business-friendly policies, such as regulatory relief and an extension of the 2017 Tax Cuts and Jobs Act that he is working to ram through Congress.
The slate of tariffs the 47th president announced Wednesday marks the largest peacetime tax increase in US history. Trump tapped into his emergency powers to slap those tariffs on foreign imports.
