Trump’s ‘Liberation Day’ – a retreat of epic proportions

The Trump administration’s application of retaliatory tariffs to US importers is an epic retreat of the USA from the global system and rules based order that it helped create and lead in the post WWII era. 

According to the administration, the broad range of tariffs announced on the 3 April 2025 has been devised to rebalance America’s trading position, onshore manufacturing to the USA and improve long term American employment and prosperity. World leaders and economists, however, have universally condemned the move for up-ending global  trade, fueling American inflation before heightening the chances of a US and Global recession. 

Initially the US consumer will be the biggest loser, as whatever tariff is applied will be passed through. This will inevitably dampen demand in the world’s largest economy and potentially plunge the US economy into recession and drag the Global economy with it. 

Not since the US Smoot-Hawley Tariff Act of 1930, which is credited with collapsing world trade by 60%, has there been a bigger single avoidable act, outside World Wars and pandemics, to threaten global stability. 

The Asia-Pacific region has been hit hardest by the American tariffs and already the trade ministers of China, Japan and South Korea have agreed to work more closely together. Australian agriculture is entrenched into the hemisphere’s supply chain and may about to become even more important as China pivots away from the US. The short term global economic shocks are starting, but as the jigsaw of global trade irreversibly changes, Australia could be well placed.