President Donald Trump’s new tariff policies collectively termed as ” Liberation Day Tariffs ” were officially launched on 2 April 2025. During White House Rose Garden ceremony.
What is ‘tarrif ‘?
It is a tax imposed by the Government on import and export of the goods.
Why tariff is imposed?
- It generates revenue for the Government.
- And to protect local industries.
Cause of this tax the product of another country becomes expensive and the product of own country remains cheap and can be affordable by all.
Importance of tariff (example)
South Korea : In 1980’s and 1990’s South Korea farmers were not able to compete in the market because of the lack of modern advancement in the field of technology. And because of this reason rice from Vietnam, Thailand and USA was cheaper to afford and Korean farmers were not able to trade there rice in the market.
To save the livelihood of the farmers of South Korea, Government introduced new tax policy ” The South Korea Government retained its complete market control of in-quota imports and imposed an extremely high (513%) that will in practice preclude over-quota imports”.
And due to this decision rice from the other countries became expensive and farmers of South Korea got the chance to compete and modernize. And after the South Korean farmers improved their technology and able to compete in the global world then the tax was removed.
How tariff should be imposed?
- Negotiation – If the country id facing any problem like South Korea then first the country should communicate with the other country which has the largest portion of trade in the problem facing country and try to negotiate in a friendly manner which is good for both the countries. But Trump without communicating imposed a heavy tax on 90 countries to show power and aggression. And some countries are not happy by Trump’s decision.
Donald Trump reason behind Tariff?
- Trade Deficit – Trade deficit is the difference of Import and Export between two countries. ( i.e ) – China export product worth 2 Billion to USA and USA export product worth 1 Billion to China.
So, ( 1 Billion – 2 Billion = -1 Billion ) Trade Deficit to USA.
China, Canada and European Union reaction?
China, Canada and European Union (EU) imposed tax in the form of retaliation against USA. And targeted those places from where Trump has got most of the votes .
- China – Targeting American Farmers and tech companies in the retaliation for new Trump tax policy .
- Canada – Targeting U.S poultry farmer with 25% tax on imports in response to new U.S tariffs on Canadian goods. This includes wide range of poultry products like chicken and turkey. The tax was imposed as a retaliatory reaction to the U.S Government’s decision to announce tariffs on steel and aluminium imports from Canada and Mexico.
- European Union – E.U has imposed retaliatorytax on U.S goods. In response to the Trump administration’s decisions to levy 25% tax on steel, the European Union levied taxes on U.S steel and slaughter house related products, escalating trade tensions between the two economic powers.
Dhruv Rathee on Trump Tarrif Policy
A brief description about the whole Trade War !
History of U.S tariff policies and Result
- 4 July 1789 ,George Washington ( 1st President of U.S ) introduced Tariff Act.
- 1890 – 1500+ items were taxed at 49.5% .
- 1893 – Depression, Unemployment reached 25% .
- 1910 ,When Democrats came in power they lowers the tariff and U.S economy started uplifting again.
- 1920, Again the Republican party came in power and increased tariffs to protect Farmers and Industries
- 1929 , The Great Depression ( Reason – Tariffs )
- 1930 , President Herbert Hoover introduced Smooth Tariff Act :
20% tariffs were increased in every sector. And after this policy introduced other countries retaliate this act and imposed retaliation tariffs and the International Trade fall down 66% from 1929 to 1934 .
Singapore PM Wong on Trump Policies
Is this a Stock Market Manipulation?
When new tariff policies were introduced Stock Market started falling down at high rate. And when on 9 April news comes of 90 days pause on the policies, before the announcement Trump tweets on X ( Twitter ) ” THIS IS A GREAT TIME TO BUY!!! DJT “. It gives a clear indication of Stock Market manipulation.
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