"Liberation Day" is here. Brace yourself.
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"Liberation Day" has arrived. At 4:00 p.m. ET President Trump is expected to announce his plans for broad-based tariffs.
Why it matters: If these taxes are as high as some reports indicate, the economic fallout could be enormous.
The big picture: Several media outlets and Trump's own comments suggest we could see levies as high as 20% across a wide range of goods. Countries are expected to retaliate.
- "Needless to say, it would result in a significant recession," Mark Zandi, chief economist at Moody's, tells Axios in an email.
- The consumer impact could be substantial. The Yale Budget Lab has estimated that a 20% tariff, with retaliation, could reduce the average household's purchasing power by up to $4,200.
Between the lines: Little is actually known about what the president will announce. That uncertainty has crushed sentiment among companies and consumers, which could signal a downturn in spending and growth, though those hard data haven't yet come through.
- Even the manufacturing sector that these tariffs were designed to help is hurting. "Manufacturers are reacting poorly to higher tariffs," Comerica chief economist Bill Adams pointed out in a note Tuesday, citing recent weak data. (More on that below.)
Zoom out: In the meantime, there's been a lot of prognosticating.
- Zandi has one of the more striking projections. He sent Axios some back-of-the-envelope numbers, estimating that unemployment would rise to 5.5% by the end of 2025 and climb above 7% by 2027. (The unemployment rate sits at 4.1%.)
The intrigue: Economist Kathryn Edwards writes in a Bloomberg opinion piece that if a recession does happen, it would be the first time a president's policies directly caused one.
- Michael Strain, a conservative, writes in Project Syndicate: "Previously, it would have been unfathomable for a president — including Trump during his first term — to inflict so much harm on the economy deliberately." But he argues that ultimately "political gravity" will bring Trump to his senses.
The other side: A White House official tells Axios that tariffs are just part of the administration's economic agenda, which includes less regulation and government spending cuts.
- "Any reporting on this subject that does not make it abundantly clear that tariffs are just one part of our economic agenda is flawed and does not provide an accurate picture."
The bottom line: Some of Trump's tariffs have been on-again, off-again from the start. Are we watching a sequel? Stay tuned.
