“Liberation Day” turned out to be an aggressive, multi-layered tariff assault
Well… “Liberation Day” finally arrived, and let’s not sugarcoat it: the tariff announcement was far worse than anyone expected. It wasn’t a punch. It was a crippling blow from a political sledgehammer.
What Wall Street hoped would be a calibrated and strategic trade move turned out to be an aggressive, multi-layered tariff assault. And it has broad, punitive implications for nearly every major U.S. trading partner.
The market expected a 10% to 20% universal tariff – bad but manageable. Instead, President Trump announced a 10% minimum universal tariff across nearly all imports, plus a long list of country-specific tariffs that are, frankly, jaw-dropping.
The numbers are brutal:
- China: 54% tariff
- Vietnam: 46% tariff
- European Union: 20% tariff
- Mexico: 18%
- Canada: 16%
- Japan: 17%
- South Korea: 19%
- India: 21%
- (Yes, really. And the list goes on…)
Evercore ISI estimates that this new tariff structure raises the average U.S. tariff rate to 29%. Deutsche Bank and Bloomberg Economics chimed in with similar estimates, all suggesting a move from just 2.5% in 2024 to somewhere between 22% and 30%.
To put that in perspective: this would be the highest average tariff rate in modern American history, exceeding even Smoot-Hawley levels from the 1930s. That tariff act raised the average tariff on dutiable imports to 47% from 40%. (And for what it’s worth, as The Hill noted, “economists think the Smoot-Hawley Tariff Act actually ‘provoked a wave of foreign retaliation that plunged the world deeper into the Great Depression.’”)
Today’s Trump-era move is not just symbolic. It has real teeth.
A Potential Turning Point
The Federal Reserve’s own research suggests that every one-point increase in the average U.S. tariff rate subtracts 0.14 percentage points from GDP. Do the math on a 20- to 30-point increase, and we’re looking at a 2.8% to 4.2% hit to GDP.
Now layer that on top of what we already know.
The Atlanta Fed’s real-time tracker has first-quarter GDP growth at -3.7%. If these new tariffs take full effect and economic activity takes another 3% to 4% hit, we could see GDP fall as much as 7% to 8% this year.
That’s not just “technical recession” territory. That’s crisis territory, on par with the 2008 financial crisis or the COVID lockdown crash.
Wall Street didn’t take this well – and rightfully so. S&P 500 futures plunged as much as 3%. Nasdaq futures dropped 4%, while Russell 2000 futures collapsed 5%.
It was a sharp and visceral reaction, a market screaming: “This is bad.”
And yes, it is.
But this may also be the turning point, not into a lasting downturn but toward a diplomatic resolution – one that triggers a rally unlike any we’ve seen since 2020.
Trump’s Tariff Announcement: An Opening Move
We get it; being bullish right now might seem like whistling past the graveyard. But there are real reasons to believe that this is not the beginning of a full-blown trade war but rather the high-stakes opening move in a negotiation strategy.
Let’s unpack this.
Immediately after Trump’s tariff announcement, Treasury Secretary Scott Bessent was back on the mic, repeating what has now become a key talking point:
“These tariffs are a cap—not a floor. Countries can negotiate down from them.”
To us, this confirms what we’ve suspected all along: these tariffs are leverage, not dogma. They are meant to force other countries to the table, get them to make concessions, and ultimately, allow Trump to declare victory and roll them back.
Bessent’s language was a signal: the White House wants deals. And these tariffs are the stick meant to get them.
Before yesterday’s announcement, there was chatter that tariffs would go into effect immediately. But that’s not what happened.
The 10% universal tariff takes effect on April 5, while the country-specific tariffs take effect on April 9.
That’s a seven-day window – in our view, a deliberate buffer zone designed for one thing: negotiation.
The High-Stakes Negotiation Strategy
This feels like classic Trump. Create chaos, shock the system, then invite world leaders into the conversation, make concessions, and give Trump the chance to say, “We made a great deal. We’re going to roll back the tariffs. Everyone wins.”
It’s not policy; it’s theater. And it’s important to understand the distinction…
Because let’s be real. Our trading partners can’t afford this.
- A 54% tariff on Chinese goods is crippling for an economy already struggling to regain post-COVID momentum.
- Vietnam’s economy is built on export-led growth. A 46% tariff is a death sentence for their supply chain model.
- Even Europe’s 20% tariff is painful, especially as the region teeters on the edge of recession.
This is why we believe these countries will play ball. It seems the cost of not doing so is simply too high.
We’re confident that this is merely the start of a trade negotiation speed run, with every country trying to deescalate before April 9 hits, and the pain becomes real.
The next seven days are critical.
If these nations begin calling up the White House – and most indications suggest they will – then we’ll likely see a series of bilateral trade negotiations unfold in rapid succession.
If those talks go well, the White House can delay or roll back tariffs, announce “historic trade deals” – and spark a full-blown market rally as the worst-case scenario gets priced out.
Yes, this is a dangerous game. But it’s not a suicide mission. It’s a high-stakes negotiation strategy.
And when “Trump the dealmaker” shows up, markets usually like what happens next.
The Final Word on the Tariff Announcement
“Liberation Day” delivered a brutal gut-punch; no question.
But the worst economic outcomes are still avoidable. These tariffs haven’t taken effect yet, making them threats, not outcomes.
And threats can be walked back.
We believe they will be. In our view, these tariffs are leverage. The timeline is tactical. The language is negotiable. And the pain is too high to be permanent.
If the next seven to 14 days bring progress on trade deals, the market should rally. And this week’s selloff will likely turn out to be a massive buying opportunity.
So, while it may be bloody out there right now, we’re staying bullish…
Because this isn’t the end of the story. It’s just the opening act.
And if the diplomatic puzzle comes together like we expect, then stocks aren’t falling off a cliff: they’re loading the launchpad.
If you’re looking to get positioned for the market’s coming blastoff, we’d like to turn your attention to Elon Musk’s biggest tech bet yet – his humanoid robot, Optimus.
Tesla is already using these robots to complete a variety of tasks in its factories. It plans to ramp up Optimus production to use them in its factories worldwide. It’s said that next year, it will start selling its robots to outside companies. And after that, it aims to offer them to consumers like you and me.
That means that we could soon have our own personal humanoid robot assistant in our homes, doing everything from unloading groceries and cleaning to safeguarding our house while we’re away.
This robotic-driven future could easily become a generational investment opportunity.
But while Tesla makes this robot, Tesla stock is not the best way to make a play on Optimus.
Rather, I’ve discovered what I believe is a far superior way to profit from it – a more compelling stock that will potentially supply the bot’s critical components.
Learn more about the best way to play the Robot Revolution.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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