Countdown to Liberation Day! How will the domino effect of US tariffs shape the largest trade war in history?

US President Trump set April 2nd as "Liberation Day," announcing a "reciprocal tariff" of over 20% on goods from more than 25 countries, involving an amount up to 1.5 trillion dollars. As countries implement retaliatory measures, this global trade storm has severely damaged markets and confidence, potentially triggering fundamental changes in global inflation, supply chains, and economic landscape.

"Liberation Day" Approaching, Will Strict Reciprocal Tariffs Be Implemented?

The "Liberation Day" Trump has mentioned for weeks is approaching. According to financial media Kobeissi Letter, starting April 2nd, the US will impose over 20% "reciprocal tariffs" on imported goods from more than 25 countries, involving steel, aluminum, energy, automotive, and Chinese goods worth hundreds of billions of dollars, becoming the largest trade war in history.

In addition to existing tariff measures, a 25% automotive tariff will be implemented this week, along with additional tariffs on countries trading with Venezuelan oil. Trump also previewed upcoming tariffs on the pharmaceutical industry, demonstrating a tough protectionist stance and signaling the trade war is entering a full-scale phase.

(US Launches Automotive Trade Storm: Trump's "Liberation Day" Tariffs Reshape Global Car Market)

Countries' Counterattacks Trigger "Tariff Domino Effect," Forming the Largest Trade War in History

The US's high-pressure tariff policy has triggered a global chain reaction. Canada will impose retaliatory tariffs of 21 billion dollars on US goods, China will target agricultural products with 10% to 15% tariffs, the EU promises equivalent countermeasures, and Mexico will announce its response on April 3rd.

(US Trade War Chain Effect Brewing? Canada on the Brink of Economic Crisis, Housing Market and Inflation Burning at Both Ends)

Kobeissi Letter describes this situation as "reciprocal tariffs on reciprocal tariffs," potentially evolving into the largest trade conflict in history:

The US average tariff rate has risen to 8%, a new high since 1970, expected to exceed the 1946 record by the end of this month. Global supply chains and multilateral trade systems are facing comprehensive structural risks.

Simultaneously, the economic policy uncertainty index is 80% higher than during the 2008 financial crisis. Stock market volatility has increased, with S&P 500 dropping 5% year-to-date, while gold prices have surged nearly 17%, reflecting increased hedging demand. Gold ETFs have seen a net inflow of 12 billion dollars in just two months.

Trump further stated that if Iran does not reach a nuclear agreement, he will conduct a military strike and impose secondary tariffs of up to 50% on Iranian and Russian oil. Barclays predicts:

Automotive, pharmaceutical, and semiconductor industries will face severe damage, potentially affecting overall supply chains and global production layouts.

US Consumer Confidence Collapses, Tariffs Trigger Inflation and Recession Concerns

Additionally, the US Consumer Confidence Index has plummeted 20 points to 57, returning to the low point of the 2008 financial crisis. Automotive tariffs alone are estimated to affect 275 billion dollars in imports annually, while the Trump administration expects to generate 600 billion dollars in annual revenue through tariffs, twice the scale.

According to statistics, the PCE prices of goods affected by tariffs during Trump's first trade war rose by 4%, while unaffected items' prices dropped by 2%. Experts expect inflation pressure to fully rebound from the second quarter of 2025, potentially forcing global central banks to rethink monetary policies. Funds are fleeing the stock market, with global financial markets facing a turning point. Institutional funds are withdrawing from stocks at a historic pace, with the Magnificent 7 tech stocks losing over $3 trillion in market value. Trump simultaneously announced the establishment of the "External Revenue Service" to strengthen tariff collection and enforcement. Kobeissi Letter warns that Monday's futures opening will be extremely volatile, advising investors to adjust asset allocations to prepare for potential high volatility in the coming months. The market is facing multiple compounded risks: economic slowdown, inflationary pressures, and geopolitical instability. This sudden "tariff storm" has transcended mere economic measures and is reshaping the global trade order. Multinational corporations may face supply chain reorganization pressures, while small and medium-sized countries struggle with the cascading effects of reciprocal tariffs. Some observers warn that if retaliatory actions escalate to capital and technology blockades, it could trigger a new global economic cold war. April 2nd's "Liberation Day" may be a watershed moment for US trade policy and potentially the beginning of global economic turbulence. Amid collapsing consumer confidence and mixed market signals, investors urgently need to remain vigilant, develop risk strategies, and prepare for an impact that could reshape the global economic landscape. Risk Warning: Cryptocurrency investments carry high risks, with potentially extreme price volatility. You may lose your entire principal. Please carefully assess the risks.