this video was brought to you by Incogn On Wednesday afternoon as part of what he called Liberation Day US President Donald Trump announced a sweeping raft of tariffs including a 10% universal tariff on literally everything coming into the US a 34% tariff on Chinese imports to go on top of the 20% tariff already in place and a 20% tariff on all EU imports It's hard to overstate quite how insane all of this is assuming that it actually happens In fact CNBC has described it as worse than the worst case scenario for markets So in this video we're going to take a look at what happened on Liberation Day and what might happen [Music] next Before we get into it if you enjoy our content and appreciate us working through the night to get this video to you then grab a copy of our magazine too long It contains our very best journalism including a rundown of the world's most influential people as voted for by you and the TLDDR team Buying a copy helps to fund the rest of our journalism So we'd really appreciate it if you click the link in the description to buy a copy Plus in the spirit of Trump here's a random selection of discount codes on a wildl looking chart And there's a limited number of each code so act fast Now before we get into the meat of Trump's tariffs a bit of context Going into Liberation Day there was a fair bit of ambiguity over what tariffs Trump was actually planning on imposing In the White House memorandum announcing the tariffs which was published back in February Trump promised quote reciprocal tariffs And this is something he actually talked about a fair bit during the campaign when he promised quote an I for an eye a tariff for a tariff same exact amount Now at first this idea sounds pretty reasonable After all it is true that America has lower tariffs than most other countries And if you subscribe to Trump's mercantalist view on economics you might think that this is unfair because it makes it harder for American companies to export to the rest of the world than it does for the rest of the world to export to the US Equally it seems like a fair way to encourage free trade across the globe After all reciprocity implies that if these countries were to drop their trade barriers the US would simply do the same However if you think about it for a second you realize that this is a pretty well problematic policy For starters if reciprocity was applied to individual exports as opposed to entire countries it would be enormously complicated America's tariff schedule currently covers 13,000 blind items and the US trades with roughly 200 countries which implies that Washington would have to manage 2.6 million individual tariff rates It would also lead some pretty weird policies It would imply for instance that the US should at least massively reduce its 100% tariff on Chinese EV imports a policy that Trump was seemingly very keen on To make things even more complicated Trump made clear in March that his understanding of reciprocity wasn't just going to apply to tariffs He also wanted to include non-tariff barriers like currency devaluation which reduces demand for American products internationally or trade related taxes And Trump was particularly fixated on the EU's value added tax even though the vast majority of countries not just the EU use some sort of VAT And VAT doesn't even discriminate against foreign goods It's applied to both foreign and domestic made goods equally Also how Trump's team planned to calculate the effective tariff rate including not just the actual tariff but also the impact of these non-tariff barriers was always very unclear This is why going into Trump's announcement yesterday there was actually a fair bit of market optimism The S&P 500 actually rose for three consecutive days beforehand making up for some of its earlier losses and the dollar held pretty steady There was clearly some hope then that Trump and his team were just using the threat of reciprocity to leverage concessions from America's trading partners but that on Liberation Day itself Trump would exploit this ambiguity as to what reciprocity actually meant in order to introduce some relatively manageable tariffs Unfortunately for well anyone with money in the American stock market that's not at all what happened Instead on Liberation Day Trump announced perhaps the biggest single day increase in tariff rates ever These tariffs weren't just applied to individual items either They were applied to entire countries as well as a flat 10% tariff on all imports into the US There was a 34% tariff on Chinese imports which is apparently going on top of the existing 20% tariff implying a 54% tariff overall A 32% tariff on all Taiwanese imports a 20% tariff on all EU imports and a 10% tariff on all UK imports And how these tariffs could be justified as reciprocal is also really quite unclear Now according to the chart that Trump displayed during the speech it looks like the flat tariffs being applied to all of these countries are either equal to or roughly half that of the effective rate that these countries apply to the US As we said earlier how Trump and his team calculated this effective rate which apparently includes currency manipulation and non-tariff barriers but we have no idea how they did it Take the EU for instance Trump claims that the EU implies a 39% tariff on American imports But it's nearly impossible to square this with the latest data from the WTO which suggests that the trade weighted average tariff on American imports in the EU is less than 2% Or take Brazil which despite being internationally renowned for its relatively high trade barriers got the minimum 10% The same as Singapore which is internationally renowned for its liberal attitude to free trade And it's also higher than Russia which seemingly got an exemption for some reason Even Israel which made a big show of cutting all tariffs on USIsraeli trade only a couple of days ago has been slapped with a 17% tariff for some reason Well anyway what does all of this mean for both the American and global economies well even protariff economists would admit that in the short term there's going to be a fair bit of pain Let's start with what this means for the American economy At the time of writing the S&P 500 was down 3% and falling which is pretty massive by out of standards And while the stock market isn't the real economy the American economy relies more than ever on demand from the richest 10% of earners which now account for half of all spending in the country And those earners spending patterns are disproportionately affected by movements in the stock market Now you might expect less domestic demand to result in lower prices But these tariffs will almost definitely stoke inflation in the US by making imports more expensive at least in the short term This is both bad news for American consumers but also for the Federal Reserve which could end up stuck between a stagnant economy which needs lower interest rates and persistent inflation which needs higher interest rates Things don't look much better for the global economy either Obviously these tariffs will be bad in and of themselves again at least in the short term But their severity and almost randomness means that they're overwhelmingly likely to invite retaliatory tariffs from affected countries who will probably decide that this is just the only way to negotiate with Trump even if it just compounds the economic pain for now Honestly though this is unprecedented territory So you really ought to subscribe if you want to stay up to date Now as we've demonstrated in this video there's a huge amount of uncertainty in the world about politics and current affairs Often with few easy solutions Unfortunately this can be the case online too There are all kinds of bad actors out there that want to try and use you to make a quick buck Take for instance data brokers They sell your data to businesses and marketing agencies leading to more spam calls texts and emails or even worse they can sell your data to even worse actors who can go on to use your identity Some data brokers have even been charged with conspiracy to commit mail and wire fraud for internationally supplying data lists of elderly and vulnerable people to scammers Fortunately today's sponsor Incogn to rectify this They work on your behalf to request your personal data removal They also deal with any objections and to make sure that your personal information isn't just shared by the brokers Again they conduct repeated removal requests And with their family and friends plan they'll even do this for you and up to three of well your friends and family So create an account with our link in the description granting Cognney the ability to work on your behalf and sit back as they make you safer Plus if you use our link you'll get an exclusive 60% off an annual Incogn plan So thanks for checking it out and thanks to Incogn for sponsoring this video