Countdown to Liberation Day! How do the ripple effects of U.S. tariffs shape the largest trade war in history?

U.S. President Trump has designated April 2 as "Liberation Day" and announced the implementation of over 20% "reciprocal tariffs" on goods from more than 25 countries, affecting an amount as high as $1.5 trillion. As various countries have launched retaliatory measures, this global trade storm has severely impacted markets and confidence, leading to fundamental changes in future global inflation, Supply Chain, and economic situations.

With the "Liberation Day" approaching, will the strict reciprocal tariffs be implemented?

According to the financial media Kobeissi Letter, from April 2, the United States will impose more than 20% "reciprocal tariffs" on imports from more than 25 countries, involving hundreds of billions of dollars in steel and aluminum, energy, automobiles, Chinese goods and other fields, becoming the largest trade war in history.

In addition to the existing tariff measures, a 25% tariff on automobiles will be implemented this week, as well as additional tariffs on countries trading oil with Venezuela. Trump also hinted at upcoming tariffs on the pharmaceutical industry, showcasing a hardline protectionist stance, indicating that this trade war is entering a fully activated phase.

( The U.S. ignites a storm in the automotive trade: Trump's "Day of Liberation" tariffs reshape the global car market )

Countries retaliate, triggering the "tariff domino effect," as the largest trade war in history takes shape.

The United States' high-pressure tariff policy has triggered a global chain reaction, with Canada imposing $21 billion in retaliatory tariffs on U.S. goods, China targeting agricultural products with tariffs of 10% to 15%, the European Union also promising to take equivalent countermeasures, and Mexico set to announce its countermeasures on April 3.

(The chain reaction of the US trade war is fermenting? Canada is on the brink of an economic crisis, with inflation burning at both ends in the housing market)

Kobeissi Letter describes this situation as "reciprocal tariffs on reciprocal tariffs," which may evolve into the largest trade conflict in history:

The average tariff rate in the United States has risen to 8%, reaching a new high since 1970, and is expected to surpass the record set in 1946 by the end of this month. The global Supply Chain and multilateral trade system are facing comprehensive structural risks.

At the same time, the economic policy uncertainty index has risen 80% above the levels during the 2008 financial crisis. The stock market has become more volatile, with the S&P 500 down 5% year-to-date, while gold prices have surged nearly 17%, reflecting a dramatic increase in safe-haven demand. In just two months, gold ETFs have seen a net inflow of $12 billion.

Trump further stated that if Iran does not reach a nuclear agreement, military strikes will be carried out, and a secondary tariff of up to 50% will be imposed on Iranian and Russian oil. Barclays predicts that:

Key industries such as automotive, pharmaceuticals, and semiconductors will face severe impacts, which may affect the overall Supply Chain and global production layout.

U.S. consumer confidence collapses, tariffs ignite concerns of inflation and recession

In addition, the U.S. Consumer Confidence Index plummeted by 20 points to 57, returning to the low point of the 2008 financial crisis. Just the auto tariffs are estimated to impact $275 billion in annual imports, while the Trump administration expects to generate $600 billion in annual revenue through tariffs, which is equivalent to twice the scale.

According to statistics, during the first round of the trade war, the prices of goods affected by tariffs rose 4% in PCE, while the prices of unaffected items actually fell by 2%. Experts expect that starting in the second quarter of 2025, inflationary pressures will rise across the board, potentially forcing global central banks to rethink monetary policy.

(Maintaining high interest rates may be a reasonable choice! Federal Reserve Collins: Trump's tariff policy inevitably raises inflation)

Funds are fleeing the stock market, and global financial markets are reaching a turning point.

In the face of this sudden tariff storm, institutional funds are withdrawing from the stock market at a historic pace, with the market value of major US tech stocks like (Magnificent 7) evaporating by over 3 trillion dollars. Trump also announced the establishment of the "(External Revenue Service)" to strengthen tariff collection and enforcement.

Kobeissi Letter warns that the futures market opening on Monday will be exceptionally volatile, and investors should adjust their asset allocation to prepare for the potential high volatility in the coming months:

The market is facing multiple overlapping risks: economic slowdown, rising inflationary pressures, and geopolitical instability. Investors should adjust their asset allocation to cope with the potential deep volatility period that may arise in the coming months.

Is a new global economic order approaching? The tariff war may rewrite industrial and geopolitical patterns.

This sudden "tariff storm" has transcended purely economic means and is reshaping the global economic and trade order. Multinational corporations may face pressures for supply chain restructuring, while small and medium-sized countries struggle to withstand the chain effects of reciprocal tariffs. Some observers warn that if retaliatory actions escalate into capital and technology blockades, it may trigger a new wave of global economic cold war.

Today, April 2nd, could be a turning point for U.S. trade policy, or it may mark the beginning of global economic turbulence. Amid collapsing consumer confidence and chaotic market signals, investors urgently need to remain vigilant, devise risk strategies, and prepare for the impact that could reshape the global economic landscape.

This article Countdown to Liberation Day! How do the U.S. tariff domino effects shape the largest trade war in history? First appeared in Chain News ABMedia.