President Donald Trump announced his “Liberation Day” tariff rollout Wednesday afternoon. The initial tariffs will go into effect on April 5.
Trump’s policy will impose a baseline 10% tariff on foreign countries. Trump will also place additional reciprocal tariffs on “bad actors,” such as China.
The stock market reacted negatively to the tariffs, which were higher than expected, dropping more than 1,400 points as of Thursday afternoon.
Trump’s team assured the public that the negative effects would only be temporary.
“We’re not going to fix things overnight,” Vice President JD Vance said in a Fox News interview. “Joe Biden left us with the largest peacetime debt and deficit in the history of the United States of America, with sky-high interest rates. You don’t fix that stuff overnight.”
In addition to generating revenue, Trump adviser Stephen Miller said the tariffs would also bring back manufacturing jobs.
“If you look at America today, we’re totally dependent on foreign countries for supplies that make this country run,” Miller said. “The effect of those global tariffs is that companies will have to move their production back into the United States.”
Trump’s previous tariffs may be part of the reason why Honda decided to move manufacturing for the Civic to Indiana from Mexico. If Miller is correct, other companies may follow suit.
In reference to Vance’s comments, the manufacturing jobs won’t come back immediately. In the interim, people may pay higher prices for foreign goods while manufacturers realign their businesses. If Trump’s policies succeed in bringing back manufacturing, the markets will recover after the initial shock.
If Trump’s tariffs work as planned, however, America will be in a better economic state than before.
Trump’s tariffs may also have an alternate, short-term effect. If Trump’s policies cause other countries to reduce their tariffs on the United States, Trump may ease back on his own tariffs.
Prices would then drop for both foreign and American-made goods, likely causing the stock market drop to be a blip.
TRUMP BETS HIS PRESIDENCY ON TARIFFS
Assuming the Trump tariffs are semi-permanent, it will likely take at least a few months until people can see what direction the policies are going. Manufacturing jobs will probably not be restored by then, but there will likely be signs of a recovery if the tariffs are working as intended.
Trump needs to have positive results in the next year leading up to the midterm elections if he wants to keep the House. If Trump’s latest batch of tariffs proves successful, he will be able to carry a major policy win into 2026. If the tariffs do not show positive effects by then, however, they will become an easy attacking point for Democrats.