Liberation Day is here; gold futures surge as Trump slaps 25% tariffs on all cars; 10% on Australia & UK, 20% on EU

President Donald Trump has unleashed the most sweeping set of tariffs in modern US history - an audacious economic gamble aimed at reshaping global trade to favour the world’s largest economy.

“Today is one of the most important days in American history as we declare our economic independence,” Trump declared from the Rose Garden in Washington.

Australia didn’t escape the spotlight. While calling us a “wonderful” ally, the President criticised the one-sided nature of our beef trade: “We import US$3 billion of Australian beef, but Australia doesn’t want any of ours.”

Trump is expected to sign an Executive Order shortly, enacting a dramatic wave of tariffs. Here’s what we know so far:

Tariff rates:

• A baseline tariff rate of 10% on all countries
• Australia & UK imports - 10%
• 25% tariffs on all cars

• Chinese imports - 34%

• Taiwanese imports - 32%
• European Union imports - 20%
• Japan imports - 24%

The highest tariff rate is 49%, which applies to Cambodia. Sri Lanka and Vietnam will pay rates of above 40%. These rates will take effect on April 5 or 9 (US time), depending on the type of tariff.

“We will charge them approximately half of what they are and have been charging us,” Trump said.

This halved figure includes the combined rate of all their tariffs, nonmonetary barriers and "other forms of cheating,” he said.

Trump linked using tariff revenues to help fund the Republican plan to extend their US$4.5 trillion tax cuts through 2034.

How are markets reacting?

S&P 500 futures briefly surged a little over 1% between 7:10-7:17 am after the market saw the blanket 10% tariff headline. After whipping out the 'chart of tariff death', it only took ~5 minutes (7:25-7:30 am) for the S&P 500 to tank around 2.5%.

Growth shares are under pressure; NASDAQ futures are down 2%, while NVIDIA and Apple are slumping approximately 4-5% in afterhours trading.

Gold is surging, with June 2025 futures up nearly 1% to US$3,175 per ounce.

P.S. Keep your eyes on this wire—we’re updating live as more tariffs are announced. This could be one of the most consequential days for global markets in 2025.

What is “Liberation Day”?

Trump’s April 2 (U.S. time) announcement marks a sweeping tariff crackdown aimed at correcting what he sees as decades of unfair trade. It’s the boldest protectionist push from the US in over 100 years - designed to penalise countries that charge higher tariffs on American exports.

How big could these tariffs be?

No firm figures yet, but speculation is swirling: 10%, 20%, even 25% tariffs are all on the table, matching earlier levies on steel, autos, and aluminium. 

“Countries with big trade surpluses with the U.S. are most at risk. That includes much of Europe, Canada, Mexico, Japan, Korea, and China. But emerging economies with high tariffs and non-tariff barriers are also vulnerable,” says Oliver. 

Will Australia be impacted?

Yes. Trump has ordered USTR to review the largest trade economies, including G20 members and nations with significant trade imbalances. Australia is on that list, with the top 20 countries accounting for 88% of U.S. trade.

That begs the question: which of our sectors are most exposed? According to Oliver: agriculture and pharmaceuticals. But the real risk is indirect.

“The bigger threat is a global slowdown triggered by a trade war. That would hit demand for our resources and exports more broadly,” he warns.

Can these tariffs be negotiated down?

Possibly. Trump has signalled he’s open to deal-making on a bilateral basis, suggesting countries may have opportunities to negotiate exemptions or reductions over time.

How are markets reacting?

Markets are jittery. Over the past month, U.S. and Australian equities have been flirting with correction territory (down ~10%), while the NASDAQ has shed 15%. Growth stocks like Pro Medicus, Amazon, Google, and NVIDIA have fallen 20–30% or more.

Meanwhile, Bitcoin has slumped to US$85,000, retreating from its recent highs above US$100,000.

The winners? Gold has surged above US$3,100 and bond markets are firming, with yields dropping as investors seek safety.

Could this spark a global slowdown - or worse?

Yes. If countries retaliate, it could severely disrupt global supply chains, increase costs, and trigger a reflation shock - just as central banks have been or were preparing to cut rates. Major US trading partners, including Canada and the European Union, are ready to announce immediate retaliatory tariffs, which would mean more fuel to the tariff fire and fast.

Bell Potter Strategist Rob Crookston warns that an escalating trade war would significantly raise the risk of a U.S. recession. But he also flags a deeper concern:

“Persistent fiscal imbalances are undermining confidence in U.S. Treasuries, and that could create structural headwinds for bond markets," he says.

What’s the best- and worst-case scenario for markets?

“The best case,” says Oliver, “is that shares fall around 15%" from their February high, Trump softens his stance under pressure, and markets recover into year-end, helped by rate cuts, tax reform, deregulation, and the continued AI boom.”

But the worst case?

“A major bear market driven by a global recession and entrenched trade conflict, with Trump slow to adjust. That would mean negative equity returns for 2025.”

But Matthew Haupt, Lead Portfolio Manager of WAM Leaders (ASX: WLE), believes that the "resolution" of highly-anticipated moments like Liberation Day can lead to a short-term rally.

"Everyone hedges leading into it, and when the actual news drops, that hedging unwinds, volatility drops, and you get leveraged buying. So you often get a one-day bounce from the resolution, even if it's just temporary. But let’s be clear, it is usually short-lived," he says.

What does this mean for inflation and interest rates?

More tariffs mean higher prices for imported goods, which could rekindle inflation and force central banks to pause or delay rate cuts. That spells more pain for rate-sensitive assets like REITs, long-duration bonds, and growth stocks.

How are other countries responding?

Canada has already fired back, announcing C$30 billion in retaliatory tariffs following the U.S. tariffs imposed on March 4. It is willing to increase this to C$155 billion, and some Canadian provinces are even threatening to cut electricity exports to US states, signalling a willingness to take the fight beyond trade.

The European Union isn’t sitting idle either. European Commission President Ursula von der Leyen says the bloc is ready to escalate further, having already slapped tariffs on up to €26 billion worth of U.S. goods in response to earlier steel and aluminium levies.

Meanwhile, Asia’s major economies are taking a more cautious approach - watching closely before deciding whether to retaliate or negotiate.

What should Australian investors be doing now?

For now, the key message from market veterans: stay diversified, lean defensive, and keep cash on hand to seize opportunities if markets tumble. And, for small-cap and growth investors in particular, be mentally ready if share prices fall.

“In the near term, there’s a case to be cautious - but also ready to act if a sharper fall in global or Australian shares creates value,” says Oliver.

“Fixed interest and gold are proving reliable diversifiers, and that’s likely to continue for some time.”

Bell Potter's Crookston agrees, though he urges selectivity in fixed income. He remains concerned about sentiment risks and ballooning U.S. debt levels, which could create structural headwinds for bonds.

“Given the rising uncertainty, gold is well-positioned as a hedge. It has historically performed well during periods of economic stress,” pointing to the table below.

Their top pick? Perth Mint Gold (ASX: PMGOLD) – the ASX-listed ETF backed by physical bullion held at the Perth Mint, with an annual fee of 0.15%.

Haupt says his portfolio is already defensively positioned, while his colleague, Oscar Oberg, Lead Portfolio Manager for WAM Microcap (ASX: WMI), warns that small-cap investors need to be prepared for heightened volatility, as these stocks are often hit hardest during periods of uncertainty.

"When tariffs were first introduced, I remember looking through our portfolio and finding only one company directly affected," says Oberg.

"Even if the fundamentals are fine ... small caps are highly volatile. So they get hurt in periods like this," he says.