On April 2, U.S. President Donald Trump announced a comprehensive “reciprocal” tariff plan, referred to as “Liberation Day,” aimed at addressing trade imbalances and promoting domestic manufacturing.
The Trump administration has unveiled reciprocal tariffs on all nations, including its closest trade partners, asserting that these measures are necessary to protect American industries and workers from unfair foreign competition.
(Reciprocal Tariff Chart; Source: The White House)
The “Liberation Day” tariffs represent a significant shift in U.S. trade policy, with the administration emphasizing economic independence and the protection of domestic industries. The full impact of these measures will become clearer as international responses unfold.
The announcement has elicited mixed reactions. Allied nations such as Australia and the UK have expressed concerns over the potential economic impact and are exploring diplomatic avenues to address the tariffs. Meanwhile, some affected nations are considering retaliatory measures.
Economists also warn that the tariffs could lead to increased consumer prices and inflation in the U.S., while also prompting retaliatory trade actions from affected countries, potentially escalating into broader trade conflicts.
Gold, deemed a safe-haven asset, surged to another record high as market concerns over a potential broader trade war intensified. The metal reached $3,167 per ounce following the announcement before experiencing a minor pullback.
(Gold, 4-H Chart; Source: Ultima Markets MT4)
Meanwhile, the U.S. dollar, as measured by the Dollar Index (DXY), sank to a seven-month low as investors flocked to safe-haven assets. The Japanese yen and Swiss franc, both considered safe-haven currencies, strengthened against the U.S. dollar.
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