A Year After ‘Liberation Day,’ Experts Review the Costs of Trump’s Tariffs

Inu Manak is a senior fellow for international trade at CFR.

On April 2, 2025, Trump celebrated his self-proclaimed “Liberation Day” by raising tariffs on nearly every U.S. trading partner to historic highs not seen since 1909. That action brought the average effective tariff rate to 22.5 percent and sent markets tumbling. Just seven days later, he reversed course, pausing the bulk of those tariffs for ninety days, leaving a 10 percent across-the-board tax on imports—while raising tariffs on China to a whopping 125 percent.  

Trump explained this change of heart as entirely intentional, prompted by “more than 75 Countries” reaching out “to negotiate a solution.” Treasury Secretary Scott Bessent further ramped up the spin, saying “President Trump created maximum negotiating leverage for himself” by issuing such a massive tariff threat, and White House advisor Peter Navarro declared that it would be possible to reach “ninety deals in ninety days.” But at the ninety-day mark, just two deals were completed. This was despite the fact that Trump still had plenty of leverage, as the remaining tariffs sat at a high of 18.5 percent—levels not seen since 1933.  

In the months that followed, the administration issued a multitude of new threats, though these were not always successful. The big deals—with Brazil, China, India—remained elusive. One year later, just seventeen deals have been concluded. Importantly, all of those deals were hammered out before the Supreme Court ruled in February that Trump’s emergency tariffs were unconstitutional. With the future of the tariff regime in limbo, some countries got cold feet about finalizing a deal. India canceled a planned trip to Washington. Implementation of the European Union’s deal was fraught and delayed. Some of the urgency to negotiate has therefore been reduced as the administration works to rebuild its tariff wall, whose final form will undoubtedly reshape all of the deals negotiated to date.  

Stepping back from the twists and turns of the negotiating drama that has unfolded since Liberation Day, it is clear that despite the bold pronouncements, little has been achieved. 

A detailed look at the content of every deal also reveals that they are not at all like trade deals of the past. Three elements stand out.  

First, the deals are asymmetrical, not reciprocal. They require U.S. trading partners to make new commitments while the United States retains higher barriers than were in place prior to Trump taking office. This means that overall U.S. protectionism is still high.  

Second, the deals take two forms: frameworks and agreements. The frameworks are loosely constructed promises to negotiate a more complete agreement in the future. They essentially serve to freeze tariffs at a certain rate and lay the groundwork for more negotiations. The agreements are pared back trade deals that include commitments beyond tariffs, such as removing regulatory barriers, coordinating “economic security” concerns, and agreeing to invest in the United States and purchase U.S. products. It remains to be seen whether all of those commitments can be met. This is especially true for the deals with developing countries, such as Cambodia and Vietnam. Unlike trade deals in the past, where the United States would provide technical assistance to developing countries to meet their obligations, today’s deals provide no such support.  

Third, and most consequentially for the future trajectory of U.S. trade policy, Trump’s approach to trade agreements has been entirely led by the executive branch. Historically, trade deals have been congressional-executive agreements because the Constitution gives Congress primary authority over trade policy. In a typical trade negotiation, Congress is consulted from start to finish, sets objectives for the executive branch, and ratifies the final text of an agreement. None of Trump’s trade deals have involved Congress. So not only has Congress had no role in ensuring the trade deals represent the interests of various constituencies, but the deals also lack the assurance that what is negotiated will be honored by the United States. Without congressional ratification, Trump can change the deals at a whim.  

Taking all of these factors into account paints a clearer picture of Trump’s trade strategy since Liberation Day, which can be described as  rushed and improvisational. The texts will likely continue to evolve and change as Trump desires. While early deals were scant on details, they became more complex over time. However, nearly every deal is a replica of a previous version, with small modifications. It is no surprise that trading partners have been confused. Furthermore, the lack of a cohesive vision and the sidelining of Congress in the negotiation process makes these deals not U.S. trade agreements, but rather Trump’s trade deals. With all the uncertainty that surrounds them, they may last just as long as his presidency.  

Edward Alden is a senior fellow at CFR, specializing in U.S. economic competitiveness, trade, and immigration policy.

Do any countries—including Washington’s closest allies—trust the United States any longer on trade? The most serious damage caused by Trump’s “Liberation Day” tariffs was the shattering of the belief the United States could be counted on, most of the time, to abide by global trade rules that had been painstakingly negotiated over decades. In one afternoon of bluster and fanciful charts, Trump set fire to the United States’ reputation as a reliable trading partner.

Despite the harm, some of that trust could be regained over the final three years of Trump’s presidency if the administration recalibrated. The Supreme Court has forced the White House to fall back on more conventional, and perhaps more predictable, tariff tools. That creates a new opportunity for reengagement with allies and close trading partners. But seizing that opening would be out of character for a president who has been more inclined to pick trade fights than to solve trade problems.

For U.S. allies, the April 2 tariffs liberated them from any illusions that trade policy in the second Trump administration would be much like the first—more protectionist, but still broadly within the orbit of global and regional trade agreements dating back to the end of the Second World War. Instead, using specious emergency authority, Trump imposed random new tariff rates ranging from 10 to 50 percent.

Many countries scrambled to negotiate shotgun trade deals to lower those rates. The United Kingdom (UK), for example, felt itself a winner when the United States locked in the 10 percent rate in exchange for modest British concessions. But the ink was barely dry when the Trump administration began reneging on the deal over concerns about the UK’s digital services tax and its food safety rules.

Others fared little better. Trump threatened the European Union with additional tariffs to force concessions on Greenland. India was hit with a 50 percent tariff over Russian oil imports, while Brazil faced the same over Trump’s sympathy for its imprisoned former president, Jair Bolsonaro. Canada was threatened repeatedly with more tariffs, even over a television ad that quoted former President Ronald Reagan on the virtues of free trade. These impulsive outbursts further eroded what scant trust remained after Liberation Day.

Then the Supreme Court ruled in February that Trump exceeded his emergency authorities by imposing tariffs not authorized by Congress. Since then, all has been quiet on the tariff front (if not on other fronts). The administration reimposed a temporary baseline tariff of 10 percent under Section 122 of the 1974 Trade Act—itself the subject of legal challenges—but did not move it to the maximum 15 percent as the president had promised, perhaps to avoid violating agreements with the lower 10 percent rate.

If the administration wants to impose further tariffs, its main authority will be Section 301 of the 1974 Trade Act, a familiar tool that permits the president to impose tariffs for “unreasonable” or discriminatory acts that harm U.S. commerce. Close allies like Japan and Europe have long disliked Section 301 (a big motivation for the now defunct dispute settlement system in the World Trade Organization was to curb the U.S. use of 301). But unlike the emergency tariffs, Section 301 has procedural safeguards. It requires a detailed investigation, allows for public input and hearings, and forces the United States to negotiate with other countries before imposing tariffs.

None of this provides great certainty to other countries, however. Last month, the Office of U.S. Trade Representative launched some sixteen new 301 investigations against major trading partners, and another sixty the next day over allegations of forced labor. The trade office’s announcement suggests these slapdash investigations seek to restore the president’s ability to impose new tariffs at will.

If so, that would be a missed opportunity. The impulsive Liberation Day tariffs alienated allies, angered friendly trading partners, and proved mostly for naught with the court decision and the billions of dollars in tariffs that must now be refunded. A barrage of irresponsible 301 actions could produce the same outcome.

Instead, the Trump administration should reconsider. It has the chance to use the trade tools as they were intended by Congress—to work in a cooperative way with trading partners, backed by the threat of tariffs if needed, to remove barriers that harm U.S. exporters. In this way, perhaps, the world’s trust in the United States on trade can slowly be rebuilt.

Benn Steil is senior fellow and director of international economics at CFR. Yuma Schuster is an analyst for geoeconomics at CFR.

One year ago, President Trump announced his global “Liberation Day” tariffs, pledging that they would restore U.S. manufacturing and raise enormous revenue from foreign countries. Countries that had faced an average tariff rate of about 2.4 percent now faced tariffs of 20, 30, 40, or even 50 percent. Stock markets around the world plummeted as investors weighed the negative implications for inflation and output.

Contrary to the president’s claims, tariffs are taxes paid by U.S. importers, not by foreign countries. The importers, however, can recoup some of the cost in three ways: pressuring foreign exporters to lower their prices, seeking out lower-cost alternative suppliers, and raising the prices U.S. consumers pay for goods.

Since Liberation Day, the president has dialed back the tariffs somewhat. Still, the average effective tariff now stands at roughly 12 percent—about five times what it was before Trump’s second term.

With inflation currently running around 3 percent, about half a percent higher than when Trump came back into office, Americans—who had been stung by soaring prices a few years earlier, under President Joe Biden—remain deeply concerned about affordability. Things they buy, from food to household goods to automobiles, are now considerably more expensive than they were before the COVID-19 pandemic’s economic disruption.

The Trump administration insists that tariffs have had a negligible effect on inflation. By their reckoning, foreigners have largely borne their incidence. Is this true?

Since Liberation Day, economists in academia and the private sector have been working to estimate exactly who has wound up bearing tariff costs: foreign exporters, U.S. importers, or U.S. consumers. Unsurprisingly, their estimates have changed over time. A week after Liberation Day, Trump paused his tariffs for ninety days to allow time for bilateral negotiations with affected countries. This pause led many importers to forestall raising prices to consumers. But despite the reductions which came, present tariff levels are still historically very high—the highest since the mid-1930s. Importers have therefore faced ever greater financial incentive to press for lower prices from their foreign suppliers, to seek alternative suppliers domestically or from lower-tariffed jurisdictions, and to pass on tariff costs to U.S. consumers.

According to a recent study by New York Federal Reserve Bank economists, Americans bore 94 percent of the tariff cost in August 2025. In contrast, foreign exporters only bore 6 percent of the tariff incidence in the form of lower import prices. By the end of the year, that figure was up to about 14 percent—indicating that U.S. importers were having some modest success passing on a portion of their tariff burden to foreign suppliers.

According to the Yale Budget Lab, the pass-through of tariff costs to U.S. consumers has increased over time. By the end of 2025, it was about 76 percent, and as high as 100 percent for many consumer durables. At his press conference on March 18, Fed Chair Jay Powell said that tariffs were adding between half a percent and three quarters of a percent to the inflation rate. This accounts for much of the Fed’s overshoot of its 2 percent Personal Consumption Expenditures (PCE) inflation target. Estimated using another standard inflation metric—the Consumer Price Index (CPI)—the tariff contribution is slightly higher, averaging 0.87 percentage points in February.

Opinion polls consistently show voters rank affordability as a top concern, while CFR’s own research found that Americans are increasingly linking tariffs to affordability. Given the certain salience of the issue for November’s midterm elections, we expect Trump to issue new tariff exemptions for popular consumer goods and their raw-material components. This will allow him to tamp down prices without having to acknowledge the lack of progress in using tariffs to reshore manufacturing.

Michael Werz is a senior fellow at CFR, focusing on the nexus of food security, climate change, migration, and emerging countries. 

Taken together, the compounding effects of Liberation Day tariffs and the Iran conflict carry the potential to set a slow-motion famine machine in motion. Food security is no longer a humanitarian concern at the margins of policymaking. It is fast becoming a systemic threat to global stability. 

Liberation Day alone has left a distinct mark on global commodity markets and triggered immediate volatility. Following the April 2025 announcement, proposed tariffs drove food prices up 1.6 percent—equivalent to an entire year of prior grocery inflation—while all 2025 tariff actions combined pushed food prices up 2.8 percent and fresh produce up 4 percent. 

The most exposed commodities tell a striking story. U.S. soybean exports to China fell 78 percent through August 2025, corn exports collapsed by 99 percent, and Brazilian coffee imports now face a 50 percent U.S. tariff. Sugar and sweets prices rose 5.7 percent year-on-year through January 2026, with a further 6.7 percent increase projected for the year ahead.  

But the full effect of Trump’s tariffs on consumer prices has yet to be realized. Economists estimate a lag of twelve to eighteen months before tariff effects reach consumers, placing peak pressure between April and October 2026. Food prices were already up 2.9 percent year-on-year in January 2026, according to data from the U.S. Department of Agriculture (USDA), and Yale Budget Lab’s full 2025 tariff scenario projected an effective annual food cost increase of roughly $1,500 for a typical U.S. household.  

The reverberations extend well beyond U.S. borders. For consumers in developing countries—who spend 50 to 70 percent of their income on food and face near-complete international price pass-through—the structural burden is far more severe. The UN Food and Agriculture Organization estimated last November that global food imports would reach a record $2.2 trillion in 2025, nearly one-tenth higher than the prior year. Sub-Saharan Africa, which imports 85 percent of its wheat and where households allocate more than half their income to food, faces a 4 percent increase in food import spending, or $65 billion, marking a third consecutive year of growth. The Middle East and North Africa region faces direct fiscal pressure on government subsidy programs whenever global grain prices spike. Countries there depend on imports for roughly 75 percent of their food, and wheat comprises 50 to 70 percent of grain consumption.  

Liberation Day has also fundamentally redrawn the map of U.S. agricultural trade. China purchased no U.S. wheat, corn, or sorghum in 2025; during the first half of that year, U.S. agricultural exports to China fell 54 percent, representing a $7.4 billion loss. The USDA projected that the full-year figure for U.S. agricultural exports would decline to $17 billion by the end of 2025, and it is expected to drop to $9 billion by the end of 2026. Brazil now supplies more than 90 percent of China’s soybean imports, and Argentina has expanded its share as well. As in other sectors, Liberation Day has accelerated China’s strategic diversification away from U.S. supply chains. 

The year 2026 threatens to be still more turbulent as several food price shocks converge simultaneously. The lagged tariff effect  is reaching consumers just as unpredictable weather conditions caused by El Niño intensify and fertilizer prices rise rapidly in the wake of the U.S.-Israeli war with Iran. Critical concentration risks [PDF] include West African cocoa—predominantly produced in Ghana and the Ivory Coast—and Brazilian coffee and soybeans. Brazil has gained a near-monopoly on soybean exports to China and supplies one-third of U.S. coffee imports. Any El Niño-driven drought in Brazil would thus deliver a double global shock. Southeast Asian rice faces parallel exposure: El Niño typically suppresses monsoons across India, Indonesia, and Vietnam, all of which now operate under new U.S. tariff frameworks. 

Liberation Day may have been a year ago, but it has fueled a growing food security dilemma that could soon destabilize the world at large.

Allison J. Smith is associate director for geoeconomics at CFR.

On April 2, 2025, Trump’s message to U.S. trading partners was clear: “You build your product right here in America. Because there is no tariff if you build your plant, your product in America.” In his Liberation Day speech, Trump declared his tariffs would bring in an estimated $6 trillion in investment. While numerous investment announcements have been made over the last year, there are just as many doubts that those commitments will expand beyond words on paper.    

To date, eleven of the nineteen trading partners that signed deals in exchange for tariff reductions made commitments to invest in strategic U.S. industries, including critical minerals, energy, pharmaceuticals, and semiconductors. Japan [PDF] and South Korea [PDF] not only agreed to invest $550 billion and $350 billion, respectively, they also signed separate memoranda of understanding stipulating that a failure to fulfill investment commitments could result in a reimposition of higher tariffs. 

For some countries, these billion-dollar commitments are a substantial undertaking. Malaysia’s $70 billion investment amounts to 50 percent [PDF] of the country’s total outward foreign direct investment (FDI) stock. South Korea has expressed concerns that a bulk investment upfront could destabilize its market. Japan’s commitment has been characterized by the Federal Reserve Bank of St. Louis as a “low-cost but risky loan to the United States.” Across the board, countries are trying to appease the current U.S. administration with investment pledges, some risking their economic well-being in the process.   

Despite those concerns, and even after the Supreme Court ruling striking down Trump’s tariffs, both Japan and South Korea signaled they intend to follow through with their investment commitments. In February 2026, Japan announced its first three U.S. investment projects, totaling $36 billion, followed by another $73 billion in March. Following pressure from the Trump administration, South Korea’s parliament passed a bill creating a state-controlled investment corporation to manage the country’s investments in keeping with the deal. Few other countries have announced tangible investments as part of their deal commitments. 

Trump’s America First Investment Policy has also spurred announcements of trillions of dollars worth of investments from domestic and foreign firms. Foreign corporations alone have pledged $330 billion in FDI during the first twelve months of Trump’s second term, a more than 150 percent increase over the number of announcements during the first year of Joe Biden’s presidency. 

While announcements abound, assessing whether these pledges will materialize into concrete operations is difficult due to long lead times for fund deployment. Early indicators show the uptick in construction has yet to happen. For example, total construction spending on manufacturing has declined steadily from $230.9 billion in January 2025 to $196.2 billion in January 2026. Total capital expenditures have increased every quarter since Q2 2020, but dropped by 1.7 percent in Q2 2025.   

Furthermore, surveys show that U.S. companies are reluctant to reshore operations to the United States. In a survey of three hundred senior U.S. business executives conducted in September 2025, consulting firm KPMG found that 63 percent were considering reshoring due to the current trade environment, but only 10 percent were taking action. Another November 2025 survey by the professional association Institute for Supply Management found that 64 percent of U.S. business respondents said they had no plans to reshore their operations. 

Foreign investors are also expressing reservations about investing in the United States, despite making promises to the Trump administration. A February 2026 survey by the German Chamber of Commerce and Industry found that 50 percent of German companies with U.S. business planned to invest [PDF] less or postpone investment in the United States in response to current tariff policy. With much of Trump’s tariff policy still unclear, that uncertainty is likely to linger. 

While it is still too early to tell whether Trump will deliver on his Liberation Day investment promises, there is good reason to be skeptical of the ability of governments and firms to deliver on the headline figures. U.S. trading partners are already struggling to uphold the onerous commitments in their trade deals, and many companies are hesitant to increase investment in the United States. For now, it appears there will not be a large increase in FDI in the United States anytime soon. 

This work represents the views and opinions solely of the authors. The Council on Foreign Relations is an independent, nonpartisan membership organization, think tank, and publisher, and takes no institutional positions on matters of policy.