In April 2025, U.S. President Donald Trump, on a day he dubbed “Liberation Day,” announced sweeping tariffs that challenged the United States’ long-standing commitment to free trade. At a White House ceremony, Trump declared a 10% across-the-board tariff on all imports and imposed much higher rates on dozens of countries, including some of America’s largest trading partners.[i] This move sent shockwaves through global markets, stunned U.S. allies, and was interpreted as the beginning of the end for the free trade order that had endured for decades. Trump’s “Liberation Day” maneuver was more than an economic measure; it symbolized America’s break from the liberal international order and its shift from free-market principles toward state-driven capitalism.
Trump’s “Liberation Day” tariffs can be seen as a direct challenge to the nearly 80-year-old multilateral liberal trade regime built largely under U.S. leadership after World War II. Through institutions such as the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), the United States had long advocated free trade and low tariffs. Yet the Trump administration is now overturning this system with new tariff walls.[ii] The duties imposed rank among the most sweeping trade barriers in the past century in both scope and scale.
This wave of tariffs has triggered threats of retaliation worldwide, fueling fears of a global trade war. Canadian Prime Minister Mark Carney remarked that the U.S. had abandoned its role as “champion of international economic cooperation.”.[iii] On the European side, European Commission President Ursula von der Leyen called the tariffs “a major blow, as our ally has left us in the lurch,” stressing that the EU was ready to deliver a joint response. The tariffs also signal a rupture with international law and institutions. The Washington administration effectively sidelined the WTO’s principle of “non-discrimination” by applying different tariff rates to each country. To implement the policy, Trump declared America’s massive trade deficit a “national emergency” and invoked the 1977 International Emergency Economic Powers Act.[iv] This extraordinary legal maneuver was denounced as unlawful and arbitrary by U.S. allies.
This step represents a paradigmatic shift in America’s economic orientation. Contrary to the traditional conservative line of defending free markets, Trump seeks to raise protectionist walls by expanding the state’s role in the economy. The effort to sharply reshape international supply chains by state decree pushes market dynamics into the background. While the administration frames the tariffs in terms of “reciprocity,” the rates applied are often several times higher than the tariffs those countries impose on U.S. goods.[v]
In the long run, this approach raises serious questions about its impact on American productivity. While protectionism may shield some domestic producers in the short term, it can also encourage inefficiency by reducing competitive pressures. Trump’s economic nationalism places the U.S. on the opposite side of the free trade ideology it once championed. State capitalism is a model in which the state acts as a guiding force in shaping market outcomes. Trump’s tariff plan exemplifies this: Washington decides which countries face what rates, which goods are exempt, and which are penalized. This mirrors the practices of rivals like China and Russia, who already operate within state capitalist frameworks. A crucial dimension of this orientation is the use of economic tools for strategic and political purposes. Trump is deploying tariffs as instruments of geopolitical leverage. For instance, tariffs on Mexico and Canada were introduced partly to pressure them on issues ranging from border security to the synthetic opioid (fentanyl) crisis.[vi] The intertwining of trade policy with security issues cannot be explained through free-market logic. In this context, the state apparatus becomes the decisive actor in the economy, while market forces take a back seat.
Trump’s move also holds significant weight in U.S. domestic politics. Above all, it can be seen as the fulfillment of promises to his electoral base. Associated with the slogan “Make America Great Again,” Trump has long argued that the working class and deindustrialized regions have been victims of global trade. The “Liberation Day” narrative offers these groups a promise of redemption. Trump claims that high tariffs will encourage producers to invest in the U.S., ultimately revitalizing the manufacturing sector. His strategy is to strengthen support in the industrial Midwest and so-called “Rust Belt” states. Unsurprisingly, the tariff announcement was celebrated among his supporters as a show of strength and cast as a domestic political victory.
Yet the potential economic costs of such aggressive protectionism are a subject of debate. Democrats and some Republicans argue that “Liberation Day” will, in reality, turn into “Inflation Day” for American consumers. Democratic House Leader Hakeem Jeffries said in an April 2 press conference: “This is not Liberation Day, it’s Recession Day for America,” warning that Trump’s move would lead to economic disaster.[vii] Nevertheless, much of the Republican Party has embraced this protectionist turn, taking into account Trump’s political clout and the support of the party’s base. The Trump camp, for its part, emphasizes the long-term gains over the short-term pains of tariffs. The White House defended the policy by pointing to what it claimed were the successes of Trump’s more limited tariffs during his first term.[viii] In the realm of U.S. domestic politics, “Liberation Day” stands as part of Trump’s populist-nationalist vision. This policy has played a pivotal role in mainstreaming anti-globalization and economic nationalism within American politics.
The “Liberation Day” tariffs signify America’s de facto break from the liberal international order, replacing free trade with protectionism. This transformation challenges the multilateral trading system the U.S. had championed for decades, strains relations with allies, and threatens global economic stability. While certain sectors may benefit in the short term, the longer-term risks include declining productivity, shrinking investment, and retaliatory measures. For the U.S. to maintain global leadership, it will need to balance protectionist impulses, spearhead WTO reform, and reestablish transparency and predictability in trade policy.
[i] “Trump Stokes Trade War as World Reels from Tariff Shock”, Reuters, https://www.reuters.com/world/trump-stokes-trade-war-world-reels-tariff-shock-2025-04-03/, (Date Accessed: 18.08.2025).
[ii] Ibid.
[iii] Ibid.
[iv] Doug Palmer ve Daniel Desrochers, “Trump Imposes 10 Percent Universal Tariff, Higher for Top Trade Partners”, Politico, https://www.politico.com/news/2025/04/02/trump-tariff-trade-partners-liberation-day-00267350, (Date Accessed: 18.08.2025).
[v] Ibid.
[vi] Ibid.
[vii] Democratic Leader Hakeem Jeffries, “Leader Jeffries Statement on Donald Trump Driving the Country Toward a Recession,” press release, August 1, 2025, Jeffries House, https://jeffries.house.gov/2025/08/01/leader-jeffries-statement-on-donald-trump-driving-the-country-toward-a-recession/, (Date Accessed: 18.08.2025).
[viii] Ana Swanson, Alan Rappeport ve Tony Romm, “Trump Announces Sweeping Tariffs on All Imports: Live Updates,” The New York Times, https://www.nytimes.com/live/2025/04/03/business/trump-tariffs, (Date Accessed: 18.08.2025).
