Uncertainties loom over Trump’s ‘Liberation Day’ tariffs on 1st anniversary

US President Donald Trump unveiled sweeping reciprocal tariffs on what he called "Liberation Day" on April 2, 2025, shaking global trade, but uncertainty over the policy continues one year later.

Trump's protectionist trade policies triggered major market volatility over the past 12 months as part of efforts to revive domestic industrial production.

The Washington-based Tax Foundation reported the strategy has not progressed as initially expected, as the White House shifted away from its original reciprocity framework following extensive revisions. The tariffs were changed more than 50 times in the months after the announcement.

Trump's reciprocal tariffs were introduced with promises of broad economic transformation, but by their first anniversary debate has increasingly focused on refund claims and disputed macroeconomic outcomes.

- Escalating trade tensions

Trump invoked the International Emergency Economic Powers Act (IEEPA) on April 2, 2025, ordering tariffs between 10% and 50% on trading partners based on tariff and non-tariff barriers applied to US goods.

A baseline 10% tariff on all countries took effect April 5, 2025, followed four days later by higher country-specific rates.

After sharp reactions on Wall Street and a major selloff in US stock markets, Trump announced a 90-day tariff pause for all countries except China while escalating tariffs on Beijing after retaliation. Additional tariffs on Chinese imports rose to 125%, combined with a separate 20% rate linked to fentanyl concerns, bringing the total to 145%.

US and Chinese officials met in Geneva in May 2025 and agreed to temporarily reduce tariffs for another 90 days. During that period, Washington imposed a reduced 30% tariff on Chinese goods effective May 14, 2025.

Delegations from both countries continued talks aimed at easing tensions.

During the tariff pause, the US reached trade arrangements with the EU, the UK, Japan and South Korea while sending tariff notices to other trading partners.

Trump signed an executive order on July 31, 2025, adjusting tariff rates between 10% and 41% on roughly 70 trading partners. Some countries faced higher rates while others saw reductions.

Washington also imposed sector-specific tariffs alongside country-based measures, including duties on steel and aluminum.

- Supreme Court rules Trump exceeded authority

Trump's reciprocal tariffs were challenged in the US Court of International Trade by private firms and several states.

The court ruled in May 2025 that the tariffs exceeded presidential authority under the IEEPA. The White House appealed the decision.

The US Court of Appeals largely upheld the lower court's ruling but allowed the tariffs to remain temporarily in force on Aug. 29, 2025, giving the administration time to file an appeal with the Supreme Court.

The US Supreme Court heard arguments Nov. 5, 2025, and ruled by a 6-3 vote on Feb. 20, 2026, that the IEEPA does not authorize the president to impose tariffs.

The ruling said the act does not include Congress' taxation authority and that such a significant delegation of power cannot be inferred from broad statutory language.

- Trump administration seeks alternative legal basis

After the Supreme Court ruling, Trump signed an executive order imposing a 10% global tariff under Section 122 of the Trade Act of 1974.

The administration argued the provision allows additional tariffs and import restrictions to address fundamental international trade imbalances.

The measure applied to imports for 150 days beginning Feb. 24, 2026.

Following the ruling, importers began seeking refunds of duties collected under IEEPA-based tariffs.

Tariffs collected under the law that may be subject to refund exceeded $175 billion, according to the Penn Wharton Budget Model.

US Customs and Border Protection (CBP) reported duties collected under IEEPA and expected to be paid as of March 4 totaled about $166 billion, according to a filing submitted to the US Court of International Trade.

The average effective US tariff rate reached 14.3%, its highest level since 1939, according to Yale University Budget Lab.

The rate declined to 7.3% after the Supreme Court ruling but later rose to 10.5% following new tariffs — excluding last year's peak, the highest since 1943.

- Trade deficit shows mixed movement

The Trump administration made no clear improvement in the US goods trade balance despite the tariff measures.

When higher tariffs took effect, the trade deficit widened rather than narrowing.

The US goods trade deficit rose 2% last year to $1.241 trillion from $1.215 trillion in 2024.

Economists said higher import costs were not offset by sufficient gains in domestic production.

However, the deficit fell 21% to $858.2 billion during the 10-month period from April 2025 through January 2026.

US exports rose 7% while imports fell 4% over the same period.

- Tariffs generate billions in revenue

The US Treasury collected substantial tariff revenues throughout 2025.

Net tariff revenue totaled $7.3 billion in January 2025, when Trump took office, and $7.2 billion in February before rising to $8.2 billion in March.

Revenue increased sharply after the 10% baseline tariff took effect, reaching $15.6 billion in April and $22.2 billion in May.

Tariff revenue reached $26.6 billion in June, $27.7 billion in July, $29.5 billion in August, $29.7 billion in September, $31.4 billion in October, $30.8 billion in November and $27.9 billion in December.

Revenue totaled $27.7 billion in January 2026 and $26.6 billion in February.

Total tariff revenue reached $264 billion in 2025 and $295.6 billion when calculated from April 2025, when reciprocal tariffs were introduced.

This fell short of the White House projection of between $300 billion and $600 billion annually.

- US businesses bear burden of tariffs

The administration's tariff policies significantly increased costs for US small businesses.

Tariff payments by small-business importers tripled between March 2025 and February 2026 compared with the previous 12-month period, according to the Washington-based Center for American Progress (CAP).

The average small-business importer paid an additional $306,000 in tariffs over the past year.

US importers and businesses absorbed 96% of tariff costs, according to the Germany-based Kiel Institute for the World Economy.

Tax Foundation data also showed foreign direct investment into the US totaled $288.4 billion, below the 10-year average of $320.7 billion.

The US Department of Labor reported the manufacturing sector lost around 100,000 jobs between April 2025 and early 2026.