Liberation Day tariffs: a political gimmick?

ON APRIL 2, 2025, President Donald Trump declared “Liberation Day, unveiling a sweeping set of tariffs aimed at reshaping America’s trade relationships.

- CHLOE MALULEKE

The policy introduces a universal 10% tariff on all imports, with significantly higher rates for specific countries, purportedly to address trade imbalances and bolster domestic manufacturing. However, the rationale and_ potential consequences of these tariffs raise serious concerns about their effectiveness, the broader economic implications, and whether they serve as a genuine economic strategy or a political manoeuvre to rally Trump's base ahead of the 2026 midterms.

The administration's method for determining these so-called “reciprocal” tariffs has drawn sharp criticism from economists. One of the most vocal critics, economist James Surowiecki, highlighted that the formula involves dividing the US trade deficit with a country by that country’s exports to the US, then halving the result to set the tariff rate. For example, the US buys $17.9 billion more from Indonesia than it sells to them.

To calculate the “reciprocal” tariff, officials divided that gap by the total amount Indonesia sells to the US ($28 billion), getting 64%. Then they cut that number in half to come up with a 32% tariff.