Liberation Day is Here for April 2, 2025
President Trump’s Liberation Day is here today. The reciprocal tariffs, which will see the U.S. match or exceed counter-tariffs from trade partners, will raise prices for ordinary Americans.
After months of tariff threats and delays, today’s plans are still unclear. On Tuesday, the media speculated on the plans. They speculated that the government will consider a 20% blanket tariff. If implemented, it would add duties on nearly all goods imported to the U.S. The Yale Budget Lab calculated that this increases inflation by more than 2%.
Impact on Income Earners
The tariffs will add a tax burden to the lower and middle-income earners. People who have higher incomes, along with corporations, will continue to enjoy lower rates. If tariffs are effective, it will cause a sudden drop in demand-elastic goods.
For now, investors are not worried about lower demand for food and beverages. PepsiCo (PEP) shares bounced from the low $141s to close at $149.67. Coca-Cola (KO) at $71.87 is near a 52-week high. Mondelez (MDLZ) shares are trading higher, up by 12.4% in the last quarter.
Your Takeaway
Avoid consumer goods stocks that people will cut back on. Implemented or not, tariff threats sent a message to Europe, Canada, Mexico, and other major trading partners. They will sell their goods to other countries that do not have this trade barrier.
