When Donald Trump announced sweeping tariffs on what he called “Liberation Day” on April 2 last year, global financial markets reacted sharply. The global share index plunged by 10%, while the Australian share market fell an even steeper 12.5%. It took nearly three weeks for both markets to recover to their previous levels, highlighting how sensitive global investors remain to trade policy shocks.
Recently, the US Supreme Court declared those tariffs illegal. Interestingly, the market reaction this time has been more muted. Global share prices have risen since the ruling, while the Australian market slipped slightly. This contrast reflects investor expectations that, despite the court decision, most tariffs are likely to remain in place through alternative policy measures.
A closer look at America’s average tariff rate explains why markets were not overly surprised. Following the initial announcement, tariff levels quickly returned close to pre–Liberation Day levels due to multiple trade deals. Even after the Supreme Court’s ruling, tariffs are not expected to fall significantly, as Trump has already signaled a “Plan B” to preserve most of them.
Trump recently claimed that tariffs reduced the U.S. trade deficit by 78%. While this statement was technically true when comparing October figures with January, the improvement proved temporary. The trade deficit has since more than doubled again, returning to its average level over the past five years. This suggests that tariffs have not delivered a lasting fix to America’s trade imbalance.
Another major promise tied to tariffs was the revival of U.S. manufacturing jobs. However, employment in manufacturing has continued to decline throughout the year, with only a small uptick in January. Analysts suggest this brief rise may be misleading, as modern manufacturing increasingly relies on automation rather than human labor.
Where tariffs have clearly made an impact is government revenue. Last year, tariffs generated approximately $288 billion, nearly triple the customs revenue recorded in 2024. Although these costs are largely borne by American consumers and businesses, tariffs remain politically attractive because they can be framed as taxes imposed on foreign countries.
In Australia, local markets fell again today, driven mainly by declines in banking and energy stocks. This followed a drop in oil prices, despite growing speculation about a possible U.S. attack on Iran. In contrast, U.S. markets closed higher on Friday, and Asian markets also posted gains, reflecting mixed global sentiment.
Currency markets were relatively calm. The Australian dollar held steady at around 70.7 US cents and just under 60 euro cents, indicating that investors are cautiously waiting for clearer economic signals.