‘Liberation Day’ Tariff Annoiuncement: Shock and Ongoing Uncertainty

Andrew Sheves Good morning.

(C) Bill Waterson

Comment - Today’s news will be full of coverage of the immediate effect of the ‘Liberation Day’ tariff announcements, but three big elements stood out while listening to the ceremony:

1 - The basis for the individual charges was unclear based on the President’s remarks, which included a range of reasons. (Note - The actual calculation released by the USTR is a completely different rationale than the one the President cited and has done little to assuage economists.)

2 - The point of the tariffs remains unclear. These have been described as:

The opening positions for negotiations to force other countries to lower tariffs

Enduring import taxes to raise revenue

A technique to force manufacturing onshore

All three cannot be true.

3 - Markets around the world hated the news and there was a notable absence of CEOs and business leaders celebrating the announcement. JP Morgan issued the note below shortly after the ceremony.

Overall, this means that a huge amount of uncertainty remains making it difficult, if not impossible, for businesses to know what to do with respect to supply chains and mid- to long-term planning. Lots of pro-Trump commentators are saying that businesses need to wait and see what the rules of the game are, but that was what yesterday was supposed to be: instead, we have global macroeconomic Calvinball.

On to the headlines

💥** ‘Liberation Day’ Tariff Shock**

President Trump imposed sweeping new tariffs on global trading partners, including a baseline 10% duty on all exporters and substantially higher rates for approximately 60 nations with large trade imbalances with the US. China faces the steepest tariff at 54%, while the EU will see 20% and Vietnam 46%. Trump exempted Canada and Mexico as long as existing 25% tariffs tied to drug trafficking and migration remain in effect, along with exemptions for certain goods covered by USMCA. Markets reacted negatively, with equity benchmarks falling 2% or more despite previous rallies based on hopes for more lenient measures. More - Bloomberg

Asia Stability Ratings and News Summary

More Unstable

🇦🇫 Afghanistan, 🇦🇲 Armenia, 🇦🇿 Azerbaijan, 🇧🇩 Bangladesh, 🇧🇹 Bhutan, 🇨🇳 China, 🇹🇱 East Timor, 🇬🇪 Georgia, 🇮🇳 India, 🇮🇩 Indonesia, 🇯🇵 Japan, 🇰🇬 Kyrgyzstan, 🇱🇦 Laos, 🇲🇾 Malaysia, 🇲🇻 Maldives, 🇲🇳 Mongolia, 🇲🇲 Myanmar, 🇳🇵 Nepal, 🇰🇵 North Korea, 🇵🇰 Pakistan, 🇵🇭 Philippines, 🇰🇷 South Korea, 🇱🇰 Sri Lanka, 🇹🇼 Taiwan, 🇹🇯 Tajikistan, 🇹🇭 Thailand, 🇹🇲 Turkmenistan, 🇺🇿 Uzbekistan

More Stable

No countries were more stable over this period

Unchanged

🇧🇳 Brunei, 🇰🇭 Cambodia, 🇰🇿 Kazakhstan, 🇸🇬 Singapor

Carpe tomorrow!