21st March: Trump declares “Liberation Day”

Speaking from his Florida estate, Trump announced that 2nd April would be “Liberation Day” – not a national holiday, but the day America would “free itself” from decades of what he described as unfair and abusive trade arrangements.

He gave no false impression of what was coming: tariffs, and a lot of them. The announcement echoed his long-standing belief that trade deficits represent exploitation – a conviction widely challenged by economists, yet central to Trump’s political narrative.

2nd April: The tariffs begin

On “Liberation Day”, Trump delivered on his promise.

A universal 10% tariff was imposed on all imports entering the United States. More significantly, the White House introduced higher, targeted tariffs on over 60 countries – an extraordinary move that included not only rivals such as China and Russia, but also allies like Japan, Israel, and the European Union.

• China was hit with an additional 34% tariff, on top of existing duties.
• The EU faced a 20% blanket tariff.
• India, South Korea, Vietnam, Japan, and Taiwan were all targeted, with varying additional rates.

Some countries received partial carve-outs – for instance, Taiwan’s semiconductor exports were spared, likely due to their strategic value to U.S. industry. Still, the underlying message was unmistakable: friendship with Washington no longer guaranteed immunity from economic aggression.

4th April: China retaliates

Beijing was swift to respond. On 4 April, China imposed a 34% tariff on all U.S. goods, effective from 10 April. The retaliation was comprehensive and immediate – a clear signal that China had no intention of remaining passive.

It marked the beginning of what now looks like a full-scale trade war between the world’s two largest economies. The reverberations were global.

5th – 8th April: Business disruption, market shock

As the tariffs began to bite, businesses across the world moved quickly to adapt. Jaguar Land Rover paused shipments to the U.S.. Nintendo delayed product launches. Companies reliant on cross-border supply chains were left scrambling.

Investor confidence tumbled. By 8 April, the S&P 500 was down more than 15% for the year, while the Nasdaq had fallen nearly 21%. For many, the scale of the downturn felt eerily similar to the pandemic-era market shocks.

And then, in typical Trump fashion, came a sudden reversal.

9th April: The pause – and a market surge

With financial markets in steep decline, Trump announced a 90-day pause on tariff hikes for most countries, temporarily easing fears of a broader trade war. However, he simultaneously increased tariffs on Chinese imports to 125%, citing their “disrespect” and retaliatory action.

The U.S. markets rallied. The S&P 500 soared 9.5%, one of its biggest single-day gains in modern history. Some called it a savvy political move. Others, more quietly, speculated whether such a dramatic sequence could point to intentional market manipulation – a theory that warrants deeper investigation in a future piece.

Europe breathes – but watches warily

For Europe, the temporary reprieve brought cautious relief. European Commission President Ursula von der Leyen called it “an important step towards stabilising the global economy.”

Yet there was unease. The EU had not been consulted in advance, nor was it fully spared. Canada – another key ally – was excluded from the tariff pause entirely, prompting Prime Minister Mark Carney to propose a new economic and security agreement with the U.S. Europe finds itself walking a tightrope – torn between avoiding escalation and asserting its own economic sovereignty.

Is there a method to the madness?

Trump’s economic worldview has long been rooted in a belief that trade is a zero-sum game. If America imports more than it exports, he sees that as losing. Most economists reject this view, arguing that trade deficits are not inherently bad and that tariffs often lead to higher prices for consumers rather than a manufacturing revival.

Some suggest there is a strategy at work – an effort to use tariffs as a negotiating tool to recalibrate global trade relationships. Others see a president clinging to outdated, disproven ideas, enacting protectionist policies with little understanding of the modern economy.

What’s clear is that his latest tariff blitz is already redefining the rules of international commerce.

What does this mean for Malta and Europe?

For a small, open economy like Malta, where trade flows and supply chains are heavily integrated with Europe, the implications are real. If tariffs on EU goods persist or intensify, import costs may rise, export competitiveness could fall, and business uncertainty will grow. Malta’s manufacturing and logistics sectors are particularly vulnerable to such external shocks.

More broadly, this saga has revived concern about the future of the global trade system. Europe’s reliance on predictability and rules-based agreements is at odds with the increasingly transactional approach of Washington. If Europe is dragged into a prolonged U.S.-China dispute or is forced to take sides, the consequences could extend far beyond tariffs.

Where do you think this will take Malta, Europe, the States, and the rest of the world?