President Donald Trump is fêting his new tariffs with a Rose Garden “Liberation Day” festival.
Wall Street traders, lawmakers, industry leaders, foreign officials and even some members of the president’s team see only dread.
Trump, at a Wednesday afternoon “Make America Wealthy Again” ceremony, will formally announce a series of new, so-called reciprocal tariffs on U.S.’s global trading partners that he says will restore fairness, free the country from a dependence on foreign goods and stimulate the economy.
But many of the president’s allies and critics are united by a fear that the new levies will plunge weary consumers into a new wellspring of economic uncertainty and possibly a recession. Some Republicans, already on edge about losing their narrow congressional majority in the midterms, fear the levies are likely to damage the president’s and the party’s popularity on inflation, an issue of paramount importance to voters who are on edge about the White House’s new trade plans.
“Part of that is Trump’s negotiating style, to keep people he’s negotiating with, other countries, off balance. But he himself has said there’s going to be short term disruption, so of course people are concerned about that,” said Sen. John Hoeven (R-N.D.).
“We’ll have to see if it works,” he added.
Top White House officials have been beset with uncertainty in recent days over the rollout, the details of which were still being finalized Tuesday. Some were preemptively looking to cast the blame on Commerce Secretary Howard Lutnick, who they see as an enabler of Trump’s worst impulses on tariffs and fear has not painted a complete picture to the president of the economic danger his plan poses.
The policy announcement is also coming at a moment of heightened political anxiety for Republicans centered around two Florida congressional special elections and a Wisconsin state Supreme Court race Tuesday that are seen as a major test for the party. Democratic wins, or even overperformances in districts considered GOP strongholds, could further spook lawmakers who worry about the perception that Trump has been unable to deliver on his primary promise to tame inflation and improve economic conditions for middle-class workers.
Trump has made clear that he understands the potential pain for consumers in the short term but has maintained that the long-term benefits will be worth it. Economists from across the spectrum have cast doubt on that gamble, warning that the tariffs will raise prices for consumers and could even throw the U.S. into a recession without the payoff Trump has forecast.
Goldman Sachs economists increased the odds Sunday that the U.S. could face a downturn in the next 12 months, from 20 to 35 percent, citing falling consumer and business confidence as well as “statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies.”
Other forecasters have similarly increased their expectations for either stagnant growth and higher prices — often referred to as “stagflation” — or an outright recession.
Meanwhile, the manufacturing sector is shrinking again, according to the latest benchmark survey from the Institute for Supply Management released Tuesday; the sector had expanded for the past two months after more than two years of contraction.
“Orders continue to slow, as discussions about who will pay for potential tariff costs are the prime topic of negotiations between buyers and sellers,” said Tim Fiore, who chairs the ISM’s manufacturing survey committee.
White House press secretary Karoline Leavitt said the American people should simply trust the president and his trade team.
“They're not going to be wrong,” she said. “It is going to work.”
Still, it’s a political risk for the president as Americans watch their 401(k) accounts follow the stock markets’ dips. Only 4 in 10 voters view the president’s handling of the economy and trade favorably, far fewer than the roughly half who support his approach on immigration, according to an AP-NORC poll conducted March 20 to 24. And even some Republicans are skeptical, with the poll showing that about 3 in 10 disapprove of how he is handling trade.
It’s coming at a particular moment of economic uncertainty for the American people, who are feeling even more uneasy about their circumstances than they were when many of them voted him into office last fall, largely on that issue. The University of Michigan’s Consumer Sentiment Index was at 57 percent in March, down 11.9 percent from February and 28.2 percent from a year ago — when enthusiasm about the economy was already low.
It’s unclear how much political pain a man who famously reads the markets as a sign of his job performance will be willing to suffer as he considers his political legacy and his ability to get the rest of his agenda through narrow majorities in Congress. He has also begun floating a third term in office — which, though unconstitutional, may make Trump more politically sensitive.
The stock market ping-ponged throughout Tuesday, with the S&P 500 down roughly 3 percent from a week ago.
As he watches the market fall below where it was when he took office, Trump has increasingly turned to investment pledges from large companies as a sign that his tariff plan is working — claiming that the country is seeing record levels of investment. But those pledges can overstate how much companies are actually increasing their spending and how many jobs will be added, and it may take years before those investments are fully realized.
The president’s tariff policies are also deepening the divide in the Republican Party between a dwindling number of free trade conservatives and the party’s newer, more protectionist contingent that gained power and influence under the MAGA banner. The Heritage Foundation, for instance, has long been emblematic of the former but shocked many conservatives when its president, Kevin Roberts, on Sunday posted on X in favor of the president’s tariff plan.
“President Trump is ending outdated trade policies that harm hard-working Americans,” Roberts said. “So now globalist elites are spitting mad that we are finally putting the interests of American workers, families, and communities over the pocketbooks of self-anointed ‘citizens of the world.’”
The division has been on clear display in the halls of the Capitol, where some Republicans are maintaining optimism that Trump’s tariff policies are being driven by an effort to ultimately lower trade barriers around the world — contradicting Trump’s stated goal of using tariffs to bring more businesses back to the U.S.
Sen. John Kennedy (R-La.) told reporters at the Capitol that he wants to bring down all tariffs to level the playing field, an idea backed by the U.S. Chamber of Commerce but one that is anathema to many of Trump’s closest advisers.
“I’m talking about zero tariffs,” Kennedy said. “Zero tariffs on American goods to Japan. Zero tariffs on Japanese goods to the United States of America. Let the companies compete. What’s wrong with that?”
Kennedy insisted he agreed with Trump’s logic but lacked his expressed patience.
“In the long run, [it] will probably work,” he said of Trump’s decision to impose large trade barriers. “The problem is that in the long run we’re all dead, and so the short run matters.”
Some members of the House Ways and Means Committee are expected to attend the event, according to a person familiar with the plans, granted anonymity to share them. The appearances seem aimed at showing broad GOP support for the tariffs — but could also risk saddling the party with more blame if the gambit fails.
Democrats on Capitol Hill, meanwhile, have been attempting to ratchet up the pressure on Republicans who are privately squirming about the impact of tariffs. Sen. Tim Kaine (D-Va.) is leading an effort to force a vote that would effectively remove part of Trump’s first round of tariffs — the 25 percent tariff on Canadian goods.
Kaine and Sen. Amy Klobuchar (D-Minn.) said Republican lawmakers are anxious but haven't yet been willing to forcefully speak out.
"Our Republican colleagues behind closed doors are telling us, ‘Keep going, keep going, keep doing this,” Klobuchar said. “Go do this because this is just decimating our businesses and our state.’”
Across the Atlantic, U.S. allies were more certain, if resigned.
“Preparedness on the EU side is the sentiment,” said one European diplomat, granted anonymity to talk about the countries’ response.
“The EU regrets the actions the U.S. will take tomorrow,” the person added, “but it has been preparing, and is ready to respond.”
Ben Guggenheim and Doug Palmer contributed to this report.
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