Imports make 14% of GDP today, triple their share in 1930, making the US more vulnerable to trade restrictions|American Life League|CC BY-NC 2.0

President Donald Trump is preparing to impose the long-awaited “Liberation Day” tariffs on several countries today.

He argues that they will create fairer trade for the US and generate revenue to offset planned tax cuts, curb immigration and reduce drug trafficking. 

According to the White House, tariffs will take effect immediately, but details remain unclear.

The move has revived fears of a trade war, drawing comparisons to the 1930 Smoot-Hawley Tariff Act, which worsened the Great Depression. Analysts warn it could escalate tensions with key US trading partners, including China, Canada, and the European Union.

Markets are concerned, fearing higher consumer prices, slower economic growth, and potential retaliation from affected countries. European Central Bank President Christine Lagarde has cautioned EU leaders about the risks of a global economic crisis. 

Canada, which sends 75% of its exports to the US, is working to diversify trade partnerships.

Bloomberg Economics estimates the levies will raise the average US tariff rate by 28 percentage points, cutting GDP by 4%—a $1 trillion economic loss. While steel and aluminum producers support the move, the US Chamber of Commerce warns that small businesses relying on imports will face higher costs and reduced profits.

Imports make 14% of GDP today, triple their share in 1930, making the US more vulnerable to trade restrictions.

Supporters and critics of the tariff policy
Trump’s team argues that the tariffs will generate $700 billion in revenue, which they claim will be used to fund tax cuts. However, critics warn that the policy will increase costs for American consumers, disrupt supply chains, and create uncertainty for investors.

Global reactions
Countries like Canada and the EU are preparing countermeasures. US businesses are divided, with some supporting protectionism while others fear rising costs. Trump insists tariffs will bring investment back to the US, but consumer sentiment has dropped. 

Meanwhile, economists warn of potential job losses and financial instability. The long-term effects remain uncertain, but risks are high.