Trump’s ‘Liberation Day’ imposes dramatic global tariff regime

A one-month pause on tariffs on certain Mexican and Canadian goods was scheduled to expire Wednesday as well, but Trump did not provide an update on that. However, reports indicated that the 10% baseline will not apply to those two countries.

In an hour-long speech in the White House Rose Garden detailing the tariffs, Trump characterized April 2 — which he dubbed “Liberation Day” — as one of the most important days in American history because as he sees it, the tariff was “a declaration of economic independence.”

He framed the new tariff rates as a “discount” relative to the levies imposed on the U.S. by each country, which he’s long accused of “ripping off” the United States. Trump previously imposed a  25% levy on all steel and aluminum imports.

“They do it to us, we do it to them,” he said.

The levies on each country were not immediately available, but during the speech Trump held up a table that showed the tariff rate for select countries next to what he claims are the tariff rates imposed on the U.S. by those countries. Each of his tariffs was less than what he said are those imposed on the U.S.

Trump’s tariff threats have been of particular concern for homebuilders, which largely rely on imports for critical construction materials, including lumber, steel, glass, appliances and plumbing fixtures.

Economists in the housing industry say that heavy tariffs will drive up home prices.

“The announced ‘Liberation Day’ tariffs could push home construction costs up by 4% to 6% over the next 12 months,” Cotality Chief Economist Selma Hepp in a statement. “When factored in with the current inflation levels, there will be an estimated 10% increase in material prices, broadly averaging around a $17,000 to $22,000 increase in construction cost per home.”

The National Association of Home Builders (NAHB) have asked the Trump administration for an exemption on tariffs for those materials, claiming that the inflationary nature of tariffs on those products will contradict a day-one memo Trump signed calling for emergency home price relief.

NAHB also says that it has gotten reports that some builders were already pricing in higher construction costs to account for any added tariffs.

Economists largely pan tariffs as bad policy and have warned that imposing duties so large in scale and scope could cause a dramatic shock to the global economy and reignite inflation, which has fallen in recent months.

While tariffs on construction materials have the most direct impact on the real estate industry, any added inflation will have a secondary effect. If inflation rises, it will not only make it harder for prospective buyers to afford a monthly payment, but would also likely keep mortgage rates high, as the Federal Reserve would be reluctant to drop the federal funds rate as a result.

“We know that affordability is the primary challenge for would-be homebuyers, so anything that raises the cost of homes will only exacerbate the problems in the housing market today,” said Realtor.com Senior Economist Joel Berner in a statement. “Builders have been doing their best to deliver smaller, more-affordable inventory to the market to fill in the missing market for first-time homebuyers, but additional tariffs, especially potential blanket tariffs against Canada and Mexico, could jeopardize their ability to continue to do so.”

The announcement ends months of speculation as to what Trump meant by “reciprocal” tariffs. It was originally considered an individualized tariff that matched those on every good from every country.

That plan was scrapped due to its heavy logistical challenge. The administration then considered placing each country into three tiers that have different tariff rates. In the days leading up to Wednesday, reports suggested there would be one tariff rate on all imports.

Markets have also responded poorly to Trump’s tariff threats since his inauguration, dropping by almost 10% since Feb. 19. Markets did not respond well to the tariffs announced Wednesday either, as major stock indices immediately dropped.

Much of the world is expected to impose retaliatory tariffs on the U.S.