All your Trump tariff questions, answered.

A “Liberation Day” explainer.

Good morning! It’s Thursday, April 3, 2025. Election Day 2026 is 579 days away. Thanks for waking up to politics.

President Trump holding up his tariff executive order. (Photo by the White House)

President Donald Trump imposed sweeping new tariffs on Wednesday, throwing the global financial system into uncertainty and establishing higher trade barriers than the U.S. has erected in more than a century. Trump dubbed the announcement “Liberation Day.” Here’s what you need to know:

Who is being tariffed, and how much?

Trump has been describing these tariffs as “reciprocal,” which would imply that the U.S. is imposing tariffs on other countries equal to the tariffs they impose on the U.S. But that is not quite what the administration ended up doing.

The U.S. Trade Representative’s office said that “individually computing” the trade barriers other countries impose would be “complex, if not impossible,” so instead the administration used trade balances — the difference between how much the U.S. imports from a country and how much the U.S. exports to it — as a proxy.

For any countries where the U.S. has a trade surplus (they buy more products from us than we buy from them) or where the trade balance is roughly equal, a flat 10% tariff was applied.

For any countries where the U.S. has a trade deficit (we buy more products from them than they buy from us), the White House used this calculation: ∆τᵢ = (x-m) ÷ (ε • φ • m), where ∆τᵢ is the new tariff rate, x is exports, m is imports, ε is the elasticity of import demand, and φ is the elasticity of import prices.

But ε was set at 4 and ε was set at 0.25, so those cancel each other out. So, essentially, the calculation is: exports - imports ÷ imports (or, even more simply, trade deficit ÷ imports). For each country, the final tariff rate was then divided by two, which the president described as a “discount.”

The White House released charts of where that leaves the tariff rate for each country, from the Heard and McDonald Islands (10%) to Laos (48%). Here are the first two pages of charts, to give you an idea:

Note that the charts makes it look like the White House took the “Tariffs Charged to the U.S.A.” from each country, and then divided by two, even though they used a calculation involving trade deficits, and then divided by two.

The president’s executive order explains that move by saying that U.S. trade deficits with other countries are “caused in substantial part” by the tariffs those countries set, but many economists have said that is an oversimplification. Trade deficits can stem from all sorts of factors, including population size and the simple fact that one country might want more of another country’s products.

“There is generally no correlation between a country’s tariff levels and its overall trade balance,” former Obama administration economist Jason Furman recently wrote in the New York Times. “A particularly clear example is the 27 countries in the European Union, which have identical tariffs and other trade policies but range from trade deficits to trade surpluses.”

Or, Furman added, take Brazil: “In recent years the United States exported more to Brazil than it imported, a fact that had more to do with Brazil’s appetite for American oil and airplanes than any trade barriers.” (In fact, Brazil levies higher tariffs on the U.S. than the U.S. does on Brazil, and still imports from us at a higher rate.)

As another example, the White House set China’s “discounted reciprocal tariff rate” at 34%, as derived by taking the U.S. trade deficit with China ($292 billion) divided by imports from China ($434 billion) — 67% — and then divided that by two.

But that does not mean that China imposes 67% tariffs on the U.S., as the White House claimed. According to the Peterson Institute for International Economics, China imposes about 23% tariffs on the U.S. (Note also that the new 34% rate will be added on top of the 20% tariffs Trump has already imposed on China, yielding a 54% tariff rate for the U.S.’ third-largest trading partner.)

Were any countries excluded from the list?

Yes. Mexico and Canada were not subject to the new tariff rates, which means a 10% rate will not be added to the 25% tariffs the president has already announced against those countries.

Countries including Russia, Belarus, Cuba and North Korea were also left off, which the White House said was because trade between the U.S. and those countries is so minimal because of sanctions. Trade between the U.S. and Russia was valued at about $3.5 billion last year (compared to $36 billion before the Russia-Ukraine war).

What will the economic impact be?

It could be massive. Many of these countries are likely to impose new tariffs against the U.S. in response, potentially launching a global trade war.

U.S. tariffs are charged to American companies that try to import products from abroad. The Trump administration hopes that the tariffs will incentivize these companies to build new factories in the U.S., instead of having to pay the tariffs, revitalizing American manufacturing in the process.

But, oftentimes, companies simply raise their prices to offset the cost of the tariffs, passing the burden onto consumers. JP Morgan estimates that the tariffs could boost prices by 1-1.5% this year. The effects that new inflation will have on consumer spending alone “could take the economy perilously close to slipping into recession,” the bank said.

“And this is before accounting for the additional hits to gross exports” (because of retaliatory tariffs) “and to investment spending” (because of economic uncertainty), JP Morgan added.

Yale University’s Budget Lab had a similar estimate on the inflation impact, forecasting a 1.3% increase in consumer prices from the Wednesday tariffs. But, when added to other tariffs already in effect, the Budget Lab estimates a 2.3% increase in consumer prices stemming from Trump’s trade policy. That is equal to “a loss of purchasing power of $3,800 per household on average in 2024 dollars,” according to the Budget Lab.

The Budget Lab estimated that the tariffs will lead to a 0.9% drop in U.S. gross domestic product (GDP) in 2025, and a 0.6% drop over the long run, equivalent to an annual decline of $160 billion in 2024 dollars.

Here is a look at the percentage price increases the Budget Lab forecasts for specific products:

Graphic by the Yale Budget Lab. “nec” = Not elsewhere classified.

The U.S. markets slumped immediately upon opening this morning, as this Wall Street Journal graphic shows:

This continues a weeks-long selloff since Trump began imposing new tariffs, as this NBC News graphic shows:

What will the political impact be?

It might not be pretty for Republicans. The tariffs represent a political gamble by Trump that Americans will swallow short-term pain — including potentially a recession — in exchange for the possibility of long-term gain in the form of shoring up domestic manufacturing.

But polls show that very few Americans are willing to take that gamble.

A recent CBS News poll found that 55% of Americans believe Trump is focusing too much on tariffs, while 64% say he is focusing not enough on tariffs. 72% of the country believes tariffs will increases prices in the short term; 47% believe they will increase prices in the long term as well.

Perhaps most damningly for Trump: in January, 42% of Americans thought the president’s policies would make them better off financially, while 28% thought the policies would make them worse off. Those views have now been flipped: 42% believe Trump’s policies will make them worse off, compared to 23% who believe they will be better off.

Notably, a new Gallup poll also found that Trump’s anti-trade rhetoric has only increased support for foreign trade among Americans: 81% said they view foreign trade as an “opportunity for economic growth,” not as a “threat to the economy” — a remarkable 20-point jump since last year.

Just as the Biden-Harris administration suffered politically from increased prices in the 2024 election, if prices continue to rise after the tariffs, Republicans are likely to face a rough midterm cycle in 2026.

How does this compare to U.S. trade policy throughout history?

According to the Yale Budget Lab, Trump’s announcement places the U.S. average effective tariff rate at 22.5%, the highest it has been since 1909 — even higher than the Smoot-Hawley tariffs of 1930.

How does Trump have the power to do this unilaterally?

The main law he cited was the International Emergency Economic Powers Act (IEEPA) of 1977, which gives the president broad powers to regulate “importation or exportation” if he declares that the U.S. faces a national emergency threatening its “national security, foreign policy, or economy.”

Here is how Trump’s executive order describes the national emergency he declared to impose the new tariffs:

I, DONALD J. TRUMP, President of the United States of America, find that underlying conditions, including a lack of reciprocity in our bilateral trade relationships, disparate tariff rates and non-tariff barriers, and U.S. trading partners’ economic policies that suppress domestic wages and consumption, as indicated by large and persistent annual U.S. goods trade deficits, constitute an unusual and extraordinary threat to the national security and economy of the United States. That threat has its source in whole or substantial part outside the United States in the domestic economic policies of key trading partners and structural imbalances in the global trading system. I hereby declare a national emergency with respect to this threat.

Can Congress override him?

Yes, but they’re not expected to.

At the broadest level: the Constitution grants Congress power over tariffs; they delegated some of that power in the IEEPA and other laws, but there is nothing stopping them from taking it back. Congress could merely pass a law setting new tariff rates, or turning tariff rates back to where they were on April 1, or January 20, or any other adjustment they want to make. However, the president could veto that law, of course, which would require two-thirds votes in each chamber to override.

But the IEEPA (and a related law, the National Emergencies Act of 1976) also lays out a direct route for Congress to undo the tariffs by ending the national emergency Trump declared to impose them.

In fact, Senate Democrats used this provision to force a vote on a different national emergency — the ones Trump used to impose tariffs against Canada — just yesterday. Their measure passed, 51-48, with four Republicans voting to end the national emergency: Sens. Susan Collins (R-ME), Mitch McConnell (R-KY), and Lisa Murkowski (R-AK), and Rand Paul (R-KY).

Theoretically, House Democrats should also be able to force a vote on the measure — the National Emergencies Act says that all such legislation should be fast-tracked — but, as you may recall, House Republicans used a procedural tactic to prevent it from being fast-tracked:

House Quietly Ducks Trump Tariff Vote

However, that procedural tactic only covered Trump’s previous national emergency declaration. That means Democrats in both chambers can still force votes on overturning the new national emergency that underpins the “reciprocal” tariffs (at least unless Republicans use the same procedural tactic in the House).

Even if Democrats are able to force those votes, though, and even if the measures pass, Trump could still veto the resolution. Veto override votes would then be necessary. In theory, if both chambers were to override Trump’s veto, the national emergency would then be over, and the tariffs announced on Wednesday would be null. But that would require 20 Senate Republicans and 77 House Republicans breaking with the president to reach the required two-thirds majority, an incredibly heavy lift.

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The day ahead

• President Trump will receive his intelligence briefing in the Situation Room, before departing for Trump National Doral Golf Club in Florida, where he will attend a dinner as part of the Saudi-backed LIV golf tournament taking place at his club this weekend. He will then travel to Mar-a-Lago to spend the night.

• The Senate will vote on a House-passed resolution overturning a Biden-era rule on walk-in coolers and freezers, before moving to confirm Dean Sauer as Solicitor General, Mehmet Oz (yes, that one) as Administrator of the Centers for Medicare and Medicaid Services, and Harmeet Dhillon as Assistant Attorney General. The chamber is also set to vote on a pair of resolutions by Sen. Bernie Sanders (I-VT) blocking arms sales to Israel, and could hold a procedural vote on a budget resolution that would unlock the reconciliation process.

• The House has left Washington for the week.