Trump’s “Liberation Day”: what to expect? 

The US is expected to announce a sweeping new tariff plan on 2nd April, billed as “Liberation Day” by Donald Trump. Even after announcing a slew of tariffs already, the president has promised that this will be “the big one”

While not much is known about the exact plan yet, such as whether there will be a universal tariff or individual rates for different trading partners, it is rumoured to be focused on reciprocal tariffs. Reciprocal tariffs are intended to target countries that impose higher tariff rates on US goods than the US imposes on their goods. What’s different about this new plan, however, is that reportedly the US  will retaliate against not just other countries’ tariffs, but also their VATs and other non-tariff barriers.

Incorporating VATs into the tariff plan  by applying the trading partner’s VAT on US imports to that country and rebating it for US exports would be a bigger hit to global trade in nominal amount than reciprocal tariffs alone. The bigger issue is that VATs are built into many countries’ tax systems and are unlikely to change. So, unlike regular tariffs that can be negotiated, this approach could lock in long-term trade barriers, meaning that it  does not just serve as short-term leverage. This would hit countries like Mexico, Ireland, and Vietnam the hardest.

In the US, the odds of a recession have increased, although it is still not the likeliest scenario, as of April 2025. The growth slowdown is expected to continue with upward pressure on consumer prices, which should eventually fade away due to restrictive fiscal and monetary policy.

What it means for investors

This will create more uncertainty in global trade, especially for companies that rely on imported goods or global supply chains. Services, which are less affected by tariffs, may be a safer bet for investors.

Companies that are well positioned to weather or even benefit from changes in border taxes include some of the financials such as Bank of America (BAC), JPMorgan (JPM), Mastercard (MA), Prudential (PRU.L) as well as industrials such as Boeing (BA), Caterpillar (CAT), General Electric (GE). Retailers and automakers such as Walmart (WMT), Nike (NKE), Gap (GAP), and Toyota (TM) which are heavily dependent on imports could be hit the hardest in their margins.  Overall, if these tariffs go into effect, investing in US-focused service companies might offer more stability than global goods producers