My fellow Americans, this is Liberation Day, waiting for a long time. April 2nd, 2025 will forever be remembered as the day. American industry was reborn the day America's destiny was reclaimed and the day that we began to make America wealthy again. We're going to make it wealthy, good and wealthy.
On Wednesday, President Trump announced sweeping new tariffs on all U.S. imports. And as you can hear, Trump called his plan, quote, liberation day, because he feels these tariffs will be the biggest step towards getting economic power back in the United States. Our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore. It's not going to happen. This move is a major escalation of Trump's trade war.
And so far, the fallout has been swift. By Thursday morning, the announcement sent shockwaves through the stock market and rattled businesses. And economists are now warning that a recession... is much more likely. From the newsroom of The Washington Post, this is Post Reports. I'm Kolbe Ekowitz. It's Thursday, April 3rd. Today... I talk with David Lynch, a financial writer for The Post, about the impact these tariffs could have on the U.S. economy and consumers.
So let's start with the absolute basics. What exactly are these tariffs that Trump announced yesterday? Well, the first thing to understand is tariff is just a fancy word for a tax. So what the president's done is he's put a new tax on all of the products that we import from...
other countries around the world and use here in the United States. Now, those can be consumer goods, the clothes you and I are wearing. It can be parts that businesses... put into bigger products you know an automaker may bring in a carburetor from mexico or wiring harness from Mexico or some electronics from China. These are all imported goods. They'll now be more expensive. The president's put two new sets or types of tariffs on. One is a 10%.
levy on everything that we bring in from all over the world. And then there's an additional set of tariffs, which he describes as reciprocal tariffs. That's really marketing. really reciprocal in the sense of what that word means, should think of them as sort of custom-tailored tariffs for individual countries, about 60 other countries that he sees as being unfair to the United States. And so when does Trump say these tariffs are going into effect?
Well, the first across-the-board 10% tariff takes effect April 5th, which I started to lose track of days, but I'm pretty sure that's Saturday. Yeah, in a couple days. Yes. And the second really draconian. said, and we should say these so-called reciprocal tariffs range up to 50%. I mean, they basically are the steepest tariffs that we've seen in a century. Wow. Those take effect a couple days later on the 9th, I believe.
Okay, so these tariffs go into effect in a couple days. When would the American consumer maybe start to feel that? Could be quite quickly. You know, these will be decisions made by individual importers and retailers and manufacturers on a product-by-product basis. It's worth bearing in mind that let's keep it simple with the 10% tariff to start. That doesn't mean every product's price will go up by 10% to the final consumer. That'll be a decision made.
product by product. But what you can say is prices are going up. What does Trump say is the goal of imposing these tariffs now? So the president's view of this is that The United States has been taken advantage of and cheated and done wrong for decades. For decades, the United States slashed our trade barriers on other countries while those nations placed massive.
tariffs on our products and created outrageous non-monetary barriers to decimate our industry and as a result of the way the global trading system has worked We've lost millions of manufacturing jobs. Factory communities across the heartland have been hollowed out. Because they've moved overseas. Because they've moved overseas. And that that's been great for Wall Street. It's been great for the fat cats who run these companies.
But the average guy and gal who work in manufacturing have been screwed. And we've got to do something about that. And the president's view is that. By using tariffs, we discourage people from buying foreign products because the way to get around a tariff is to manufacture here. He wants to see companies do that instead of making the smartphones in China.
bring all that back here to the United States. We're going to be an entirely different country and it's going to be fantastic for the workers. It's going to be fantastic for everyone. There will never have been a transformation of a country like the transformation that's already happening in the United States of America. It's an incredible thing to watch. Instead of bringing in car parts from Mexico, all that work should be done here in the United States.
and we put millions of Americans back to work in factories. That's the theory of the case. And so does it seem like that would happen, that Apple or Nike or... Volkswagen is going to start building manufacturing plants in America so that they don't have to pay these taxes. Yes and no. I mean, there's certainly reason to think that...
to some degree, to some limited degree, that that would happen and has happened in the past. But in terms of the sort of macro transformation that the president's talking about, We should say two things. First of all, there's absolutely no precedent for this in any other advanced economy. Manufacturing employment as a share of total employment has been falling in the United States since 1979. This is...
sort of a normal transformation. And think of it, if you go back far enough, you know, millions of Americans worked on farms, right? And then they moved into factories. And then from factories, factories became more efficient. More machines can do the work. You don't need as many big burly guys, you know, moving stuff around. So we need fewer people in factories. So that has been a normal transformation.
The president blames foreigners for a lot of that transformation. And he wants to run the movie in reverse now. And that is going to be at a minimum quite disruptive. And there are reasons to doubt whether it's even possible. And I would think, too, that the payoff is maybe wouldn't be felt for years down the line, because how long does it take to build a manufacturing plant in America? Like, will Trump even still be president by the time we might feel the effects of any positive change?
Yeah, no, that's another important part of the discussion here. For an automaker to change from a supplier in China to a supplier somewhere else, let's say a domestic supplier, that can't happen overnight. Then you talk about setting up a brand new factory. You know, if GM or Caterpillar or General Electric, somebody wants to put up a brand new factory somewhere, that takes years. And if you're a CEO...
And you've got to decide, okay, where am I going to put my capital investment? Do I now have to think the only safe place is here in the United States? Well, Donald Trump presumably is going to be out of office in January of 2029. We don't know if these tariffs that he announced yesterday are going to be around in five months, let alone five years. So it makes it very difficult for business to invest. So then, David, if you're a company, how do you begin to plan for these new tariffs?
Well, part of the issue here is confusion over his goals and also the tools that he's used to do this. The tools have been unilateral. An alternative way of doing this, if you wanted to make sure it was going to last, would have been to go to Congress and propose legislation and say, we're going to execute this incredible economic transformation. We're going to give business some predictability. So let's say these tariffs will be set at X, and then they'll rise.
every six months or every year, predictably, over a five-year period, let's say. And we're going to pass legislation. I sign it into law. And then it's got more permanence than a... an executive order that he can literally change today if he wants to change his mind. And then the second part is what are his goals? Is the end state...
leaving these tariffs as a permanent change in the U.S. economic system, or is it negotiating? And, you know, his supporters like to say he's the great dealmaker. He's certainly shown a propensity to negotiate over trade and tariffs. before in his first term with China and with Canada and Mexico. And so there is a school of thought that says, well, maybe the 10% is designed to be permanent, to encourage people to shift away from foreign products. But maybe these really...
eye-catching 40% and 50% tariffs, maybe that's all just a negotiated employee. But the problem is we don't know yet. Right, we don't know. I'm glad you brought up, David, the issue of... Congress. Can the president just do this? He can just tax the world and doesn't need any congressional approval for that? No, it's a good question because—
You know, again, let's go back to where we started. A tariff is a tax, and the Constitution quite explicitly grants tax-making power to Congress. Over the years, and this long predates Donald Trump, Congress has sort of delegated or subcontracted out much of this authority to the president through trade legislation.
Traditionally, most presidents did not use a lot of the powers that Congress had granted. But as we've seen in a number of realms, Donald Trump, particularly in his second term, has been quite aggressive at pushing the boundaries of presidential power.
instance, the tool he used yesterday is designed for economic emergencies. And it gives the president the sort of emergency powers you'd expect that if, you know, God forbid, an invading army was coming through and he needed to block some transactions or do something to the economy. This is the law you'd use. And so yesterday, he declared a national emergency. Now, the national emergency was over our chronic trade deficits.
which means we buy more from foreign countries than we sell them. Now, that has been the case since 1975 when I was in high school. That was a long time ago. So that's been 50 years. of trade deficits. Now, you can look at that and say, that's an emergency. We can't tolerate one more minute of that. Or you can look at that and say, well, wait a minute. Is that really an emergency, a problem that's been building for 50 years? And so you may see legal challenges to this. Yeah.
The Trump administration is hoping this also adds revenue to the United States. So who's actually paying and how much money does Trump think he can raise off of this? It's an important point. The first thing to understand is that Americans pay these tariffs. The president often, always, describes tariffs as something paid by the foreign countries. That's not how it works. American importers pay these tariffs just like you and I pay any other tax.
We import a product or a company, an American company, imports a product from overseas. They go down to the port and they pay U.S. customs officials that tariff. And how much do they think they can make off of this? Well, the administration wants to raise quite a lot of money this way, $600 billion a year. Wow. Six trillion over a decade. This is according to Peter Navarro, the president's senior trade advisor.
That might be possible, except that they also want to discourage you from buying imports. So you can only raise the money if people keep importing the same amount of products even though prices have gone up. It's a great point. And that's not really likely, right? Because the entire point of a tariff, like literally the entire point, is to discourage you from buying those foreign products, to make you look at...
you know, something from China or Mexico or the United Kingdom and say, no, that's too expensive. I'll buy something made in America instead. And if you do that, then you're not paying the tariff and the government isn't getting the revenue. And one of the inconsistencies in the president's plan is that he simultaneously wants to use this to discourage you from buying things, and yet he wants you to continue buying them so he can raise all the tariff revenue.
You can't have both. You can't have it both ways. So, big picture. Trump, his advisors, says this will strengthen the economy. Is it true? In the short term, no. I think the administration has described an approach of short-term pain for a long-term gain. The question is whether... you know, the country is going to have the stomach for the pain because, again,
This represents a heck of a gamble by the president. He promised to bring prices down on day one. Now, even allowing for political hyperbole, we're well past day one. The Federal Reserve has been struggling to get inflation under control. This is going to make it worse, not better. And depending on which economist you talk to, this is going to push prices back up to an annual rate of increase.
well over 3%, maybe touching 4% later this year. And it is an open question as to just how long people are going to be willing to tolerate that. After the break, the likely impact this will have on your wallet. We'll be right back. I'm Sally Jenkins, and I'm a sports columnist and feature writer for The Washington Post. My job entails pulling the curtain on really big sports events at what is going on in locker rooms, what's going on in the stadium tunnel.
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about what this is going to mean for the everyday American, the everyday consumer, but can we talk a little bit more, like, how much are you going to feel this in your pocketbook or in your wallet? It's important to say that All the conclusions that we have so far are based on economists' running model of how the economy works and how it will respond to various products becoming more expensive.
But depending, again, on which economist you believe, this could be $1,000 to several thousand dollars a year for the typical family. Also important to note that the people who really are going to feel this are not... People on Wall Street are not CEOs. They're the folks in the bottom 20% of the income distribution, people for whom inexpensive products from abroad.
have really been a lifeline. The folks who shop at the family dollar store and the folks who live from paycheck to paycheck who really spend a much higher proportion of their total earnings than do the more affluent folks. Those poorer people are really going to feel this. And, you know, a lot of those folks voted for Donald Trump. Yeah. And so we're taping this Thursday morning. It's around 1030.
What has been the general reaction on Wall Street and in the global market so far to Trump's announcement yesterday? I think a little bit of surprise, a little bit of despondency. Wall Street has been telling itself a story for most of the last... few months, basically that they would get all the good stuff.
That President Trump had talked about on the campaign, tax cuts, deregulation, the stuff investors love because that makes it more profitable for companies. And so the stock prices go up and they wouldn't get any of the bad stuff with IE tariffs. Yeah. overwhelmingly unpopular among investors. Because think about it, however costs were optimized for a particular company yesterday, everything just got more expensive.
Depending on how things shake out, it's going to be very tough for you to keep your profits where they were, let alone grow them. You need growing profits to get growing stock prices, which is what we all want as investors. The White House has said, Wall Street will be fine. This will shake out. Everybody talked doom and gloom in the first administration and it was great.
So, you know, just calm down, people. The difference between now and the first term is that the president has gone after all imports, whereas in the first term, it was, you know, maybe a tenth of what he's done now. focused primarily on China and to a lesser degree Canada and Mexico. So this is just an order of magnitude more comprehensive. Could this policy lead us into a recession? The short answer is yes. It certainly made it more likely, is the judgment of most of the economists.
I should say all of the economists whose research I've seen in the last 24 hours has clearly made the chances of a recession later this year more likely. And it's also triggered fears about a global. recession, which can be quite painful. Yeah. And David, these aren't even the first tariffs he's put in place since returning to office. Can we quickly just tick through where else he has already taxed countries and what kind of goods? Sure. Well...
He, at one point, threatened terrorists on Columbia because the... The Colombian president wouldn't let a plane full of illegal migrants land there. Those tariffs were on and off in the space of a few hours. He's put tariffs on Canada and Mexico over fentanyl and migrants crossing the border. And then exempted products that qualified under the trade agreement that he negotiated with those two countries back in his first term.
He's put an additional two increments of an additional 10 percent on products from China. He's put tariffs on steel and aluminum. and announced tariffs on copper, lumber. And more to come with pharmaceuticals and semiconductors. Oh, and of course the auto tariffs that took effect just 10 hours ago. So it's been soup to nuts.
And how have those affected the economy so far, the ones that are already in place? Well, I think the immediate economic impact has been fairly muted because much of this has been partial and incremental. And we're still in the early days. I mean, again, the auto tariffs just took effect just past midnight last night. But all of this will start to accumulate.
I think the president is quite serious about what he's laid out. I think he's determined to go forward with this in a way that in the first term. He may not have been. And I think it's a mistake to think that this is all some sort of chaotic. you know, bumbling effort. I think he has a clear direction of travel and the direction of travel is higher tariffs. And David, shifting just for a moment to the politics of all of this.
Trump actually saw his first major rebuke from members of his own party on the tariff issue. Wednesday night, four Senate Republicans joined with Senate Democrats to block the earlier tariffs that Trump had placed on Canada. Do you think that could change anything if more Republicans start coming out saying like, whoa, not so fast. This isn't really what our party stands for. So if you're asking whether congressional Republicans are suddenly going to rediscover their institutional.
prerogatives, I would say I'm skeptical. If you had a time machine and could go back 10 years And imagine a Republican president proposing the sort of policies that were proposed yesterday. The response from... Republicans on the Hill would have been much sharper and much more oppositional. So to me, what we saw yesterday was very muted. There's a lot of concern, but...
The concern has not gotten to the point where anybody wants to risk being attacked by the president or Elon Musk or being primaried. And so... You know, my expectation would be he still, he, the president, still has plenty of running room before, you know, the Hill would get active. Yeah. So big picture. What does... This moment, in your perspective, really symbolized for America and its role in kind of the global economy and in global politics.
So this is really a historic moment because what the president is trying to do is... really turn his back on an economic, a global economic system that was established largely by his predecessors in the White House and by generations of American policymakers. This is the world we've created. The tariffs and the trade barriers that other countries are permitted to maintain are the function of trade negotiations that we led in the early 1990s, you know, since the end of World War II.
We came out of that terrible war and American officials led an effort that said, we're not going to repeat that mistake of what were called beggar thy neighbor policies, that I put up my trade barriers to protect what I have and make you worse off. You do the same to me. No, we're going to learn our lesson and we're going to create a world by and large that over time is freer and freer.
in our ability to trade with each other. Because the thinking was that if we trade, we'll both be better off. Now, what the president... And his supporters, who were both Democrats and Republicans, I should say, would say, well, yeah, that was great. And that worked pretty well for a while. But over the last 20 or 30 years, the average guy's gotten screwed. So we want something different.
And that's sort of the legitimate anger that's been out there that the president's capitalized on. And now the question is, you know, is the remedy that he's set on, is that appropriate for the problem? David thank you so much for joining us. Happy to do it. David Lynch is a financial writer for The Post and is the author of the forthcoming book, The World's Worst Bet, How the Globalization Gamble Went Wrong.
The Trump administration continued to insist that these tariffs are not a negotiating tactic. Here's Commerce Secretary Howard Lutnick on CNN. I don't think there's any chance that President Trump's going to back off his tariffs. This is the reordering of global trade, right? That's what's going to happen. But the world should stop.
exploiting the United States of America. U.S. stocks continued to fall on Thursday. By the time markets closed, the S&P 500 dropped nearly 5%, the largest single-day loss since the early days of the pandemic. The Nasdaq was down almost 6%, also the biggest drop since 2020. The Dow Jones Industrial Average slid more than 1,600 points. That's it for Post Reports. Thanks for listening.
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