There is just over 24 hours left until President Trump unveils the specifics of his "Liberation day" from global trade barriers at 3pm on Wednesday, and with markets obsessing over what the president will/will not say, we are starting a rollling headline blog which will be updated for all major developments.
We start with the known-knowns ahead of tomorrow's big reveal:
- Reciprocal Tariffs – President Trump said on Sunday that the reciprocal tariffs he is set to announce will include all nations, not just a smaller group of 10-15 countries with the largest trade imbalances. The White House has yet to outline what tariffs are coming up, how these will be calculated or what countries will need to do to secure exemptions. The President also mentioned that these tariffs will account for other countries’ non-tariff barriers, though he has also not went into detail on how these calculations will be conducted. Regarding exemptions, President Trump said in an interview with Newsmax that he plans to limit exceptions – though the mention of potentially giving a lot of countries “breaks” last Monday at the White House has led to a steam of talks with the US (EU, India among the names of countries mentioned) regarding concessions.
- Automobile Tariffs – As per the White House Fact Sheet, the 25% tariff will be applied to imported passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and light trucks, as well as key automobile parts (engines, transmissions, powertrain parts, and electrical components), with processes to expand tariffs on additional parts if necessary. Importers of automobiles under the USMCA will be given the opportunity to certify their U.S. content and systems will be implemented such that the 25% tariff will only apply to the value of their non-U.S. content. Tariffs on vehicles are set to take effect on 3Apr and certain auto parts no later than 3May.
- Tariffs on countries importing Venuzuelan Oil – President Trump has issued an executive order declaring that any country buying oil or gas from Venezuela will pay a 25% tariff on trades with the U.S., and also extended a deadline (27 May) for Chevron to wind down operations. China, Spain, Brazil, Turkey, India, Italy, Cuba are among the countries that could be affected by this. In particular, China is Venezuela’s largest oil buyer (~55%). Goldman's research desk highlights that this will pose a significant risk for China – if this was to materialize, it will raise the total US effective tariff rate on China close to 60%.
- Sectoral Tariffs – President Trump also plans to impose tax additional tariffs to target specific industries including pharmaceutical drugs, copper and lumber.
