Weekend Read: Tariffs, “Liberation Day,” and What Investors Should Know
04/07/2025I'm sending out this “Weekend Read” a day early in an effort to explain what happened with tariffs yesterday and what’s occurring in markets today. I’m trying to be timely and don’t want to wait for the weekend.
I take pride in personally crafting each of these emails. Unlike many others in the industry who rely on prewritten content, I write these myself from scratch. My goal is to boil down complex concepts and share relevant news in an easy-to-understand format. I hope you find them both informative and enjoyable.
What’s a Tariff, and Who Actually Pays It?
I keep putting this at the top of my articles because there’s a lot of confusion on who pays for a tariff and I want to clarify that.
A tariff is a tax placed on imported goods2. Although tariffs are often portrayed as a tax on foreign companies, that’s not how it works. The tax is paid by the importer, in our case an American business.
For example, when the U.S. places a tariff on foreign-made cars, it’s not the foreign automaker footing the bill, it’s the U.S. company importing those cars. Those added costs are either absorbed by the company, or added onto the sticker price, meaning it's the American buyer who ends up paying more.
Tariffs are typically used to protect domestic industries by making foreign products more expensive, thereby giving American-made alternatives a price advantage. The tariffs do have the effect of reducing demand for that foreign country’s products, hence why tariffs are often met with strong resistance from US trading partners.
What Did Trump Announce?
Yesterday, President Trump announced what he’s calling “Liberation Day,” a sweeping economic initiative that includes a long list of new tariffs aimed at protecting American industries and punishing countries seen as taking unfair advantage of U.S. trade policy.
In a brief summary he proposed the following, a 10% tariff on all imports, with higher rates for specific nations: 34% on Chinese goods, 20% on European Union products, and 10% on imports from the United Kingdom. Additionally, a 25% tariff has been imposed on all foreign-made automobiles3.
Trump also emphasized that many of these tariffs are designed to be reciprocal4. In his view, countries like China and members of the EU have long imposed tariffs on American products that are far steeper than what the U.S. has charged in return. Under this new policy, if a foreign nation imposes a 50% tariff on American goods, this new policy would set the US tariff at 25%, roughly half the rate, as a negotiating tactic rather than an attempt at immediate equality. His stated goal is to bring those nations to the bargaining table and ultimately reach more balanced and favorable trade arrangements for American exporters and workers.
Two Ways to View This
In an effort to remain nonpartisan, I want to present both sides of the argument. Even if you ultimately disagree with one perspective, I believe it’s valuable to understand and be able to articulate both.
The pro-tariff perspective: Supporters might argue that tariffs help level the playing field. They believe global competitors, have taken advantage of lax trade policies, undercutting U.S. companies. From this view, tariffs are a way to restore balance and incentivize companies to manufacture goods in America, ultimately leading to more domestic jobs and economic self-reliance.
Proponents might also see tariffs as a strategic negotiating tool, not necessarily a long-term policy. By imposing tariffs, they believe the U.S. can pressure trading partners into coming back to the table and agreeing to more favorable economic arrangements. In this view, the tariffs may not need to stay in place forever as their true purpose is to create leverage that can lead to better trade deals and stronger protections for American workers and industries.
The anti-tariff perspective: Critics might argue that tariffs function as a hidden tax on American consumers, and they worry that this announcement could spark a damaging sequence of events. Other countries may retaliate with tariffs of their own, making it harder for American companies, to sell goods abroad. At the same time, importers are likely to pass their increased costs on to consumers, driving prices higher just as the Federal Reserve has been working to keep inflation under control. If prices rise too much, it could reignite inflation and force the Fed to hold rates higher for longer. That combination of higher prices and elevated interest rates may slow consumer spending, particularly among households already stretched thin. As spending slows, businesses could see shrinking revenues and begin to cut back, possibly on hiring or by reducing their workforce. In a worst-case scenario, this chain reaction could tip the economy into a recession.
What Should Investors Do?
With this announcement, the markets officially entered correction territory, meaning the S&P 500 has dropped at least 10% from its recent high (FactSet). While corrections can feel unsettling, they are a normal part of long-term investing and typically happen every year on average5.
I can’t say with any confidence where markets will go from here, but we have seen a large pullback with all these tariffs and their implications in mind. If they should go away or get reduced, I’d expect some considerable recovery. Nevertheless, the market pulled back enough that I think it’s time for a rebalance.
Rebalancing means adjusting your investment mix back to its original target. For example, if stocks have dropped and now make up a smaller portion of your portfolio than planned, you might sell some bonds and buy stocks to get back in alignment. It’s a disciplined way to “buy low and sell high”, and it helps keep your risk in check as well as hopefully poise you for the recovery.
If you’ve only recently joined my email list, you’ve missed out on many insights and updates that I've been sharing each week. Be sure to visit my blog to explore past content that you might find valuable.
If you have questions or want to talk through what this means for your personal situation, don’t hesitate to reach out. I’m happy to talk.
Enjoy your weekend,
Jeremy Raffer, MBA
Director & Wealth Manager
Author “Financial Planning for Widows”
m. 201-747-2705
w. rafferwealthmanagement.com
e. [email protected]
Steward Partners
115 W. Century Rd, Suite 145
Paramus, NJ 07652.
1https://www.reuters.com/markets/trump-tariffs-draw-global-promises-counter-measures-2025-04-03/
2 https://www.investopedia.com/terms/t/tariff.asp
3 https://www.bbc.com/news/articles/c1jxrnl9xe2o
4 https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security/
5 https://www.fidelity.com/learning-center/trading-investing/corrections
The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
AdTrax 7816201.1 Exp 4/2026
I take pride in personally crafting each of these emails. Unlike many others in the industry who rely on prewritten content, I write these myself from scratch. My goal is to boil down complex concepts and share relevant news in an easy-to-understand format. I hope you find them both informative and enjoyable.
What’s a Tariff, and Who Actually Pays It?
I keep putting this at the top of my articles because there’s a lot of confusion on who pays for a tariff and I want to clarify that.
A tariff is a tax placed on imported goods2. Although tariffs are often portrayed as a tax on foreign companies, that’s not how it works. The tax is paid by the importer, in our case an American business.
For example, when the U.S. places a tariff on foreign-made cars, it’s not the foreign automaker footing the bill, it’s the U.S. company importing those cars. Those added costs are either absorbed by the company, or added onto the sticker price, meaning it's the American buyer who ends up paying more.
Tariffs are typically used to protect domestic industries by making foreign products more expensive, thereby giving American-made alternatives a price advantage. The tariffs do have the effect of reducing demand for that foreign country’s products, hence why tariffs are often met with strong resistance from US trading partners.
What Did Trump Announce?
Yesterday, President Trump announced what he’s calling “Liberation Day,” a sweeping economic initiative that includes a long list of new tariffs aimed at protecting American industries and punishing countries seen as taking unfair advantage of U.S. trade policy.
In a brief summary he proposed the following, a 10% tariff on all imports, with higher rates for specific nations: 34% on Chinese goods, 20% on European Union products, and 10% on imports from the United Kingdom. Additionally, a 25% tariff has been imposed on all foreign-made automobiles3.
Trump also emphasized that many of these tariffs are designed to be reciprocal4. In his view, countries like China and members of the EU have long imposed tariffs on American products that are far steeper than what the U.S. has charged in return. Under this new policy, if a foreign nation imposes a 50% tariff on American goods, this new policy would set the US tariff at 25%, roughly half the rate, as a negotiating tactic rather than an attempt at immediate equality. His stated goal is to bring those nations to the bargaining table and ultimately reach more balanced and favorable trade arrangements for American exporters and workers.
Two Ways to View This
In an effort to remain nonpartisan, I want to present both sides of the argument. Even if you ultimately disagree with one perspective, I believe it’s valuable to understand and be able to articulate both.
The pro-tariff perspective: Supporters might argue that tariffs help level the playing field. They believe global competitors, have taken advantage of lax trade policies, undercutting U.S. companies. From this view, tariffs are a way to restore balance and incentivize companies to manufacture goods in America, ultimately leading to more domestic jobs and economic self-reliance.
Proponents might also see tariffs as a strategic negotiating tool, not necessarily a long-term policy. By imposing tariffs, they believe the U.S. can pressure trading partners into coming back to the table and agreeing to more favorable economic arrangements. In this view, the tariffs may not need to stay in place forever as their true purpose is to create leverage that can lead to better trade deals and stronger protections for American workers and industries.
The anti-tariff perspective: Critics might argue that tariffs function as a hidden tax on American consumers, and they worry that this announcement could spark a damaging sequence of events. Other countries may retaliate with tariffs of their own, making it harder for American companies, to sell goods abroad. At the same time, importers are likely to pass their increased costs on to consumers, driving prices higher just as the Federal Reserve has been working to keep inflation under control. If prices rise too much, it could reignite inflation and force the Fed to hold rates higher for longer. That combination of higher prices and elevated interest rates may slow consumer spending, particularly among households already stretched thin. As spending slows, businesses could see shrinking revenues and begin to cut back, possibly on hiring or by reducing their workforce. In a worst-case scenario, this chain reaction could tip the economy into a recession.
What Should Investors Do?
With this announcement, the markets officially entered correction territory, meaning the S&P 500 has dropped at least 10% from its recent high (FactSet). While corrections can feel unsettling, they are a normal part of long-term investing and typically happen every year on average5.
I can’t say with any confidence where markets will go from here, but we have seen a large pullback with all these tariffs and their implications in mind. If they should go away or get reduced, I’d expect some considerable recovery. Nevertheless, the market pulled back enough that I think it’s time for a rebalance.
Rebalancing means adjusting your investment mix back to its original target. For example, if stocks have dropped and now make up a smaller portion of your portfolio than planned, you might sell some bonds and buy stocks to get back in alignment. It’s a disciplined way to “buy low and sell high”, and it helps keep your risk in check as well as hopefully poise you for the recovery.
If you’ve only recently joined my email list, you’ve missed out on many insights and updates that I've been sharing each week. Be sure to visit my blog to explore past content that you might find valuable.
If you have questions or want to talk through what this means for your personal situation, don’t hesitate to reach out. I’m happy to talk.
Enjoy your weekend,
Jeremy Raffer, MBA
Director & Wealth Manager
Author “Financial Planning for Widows”
m. 201-747-2705
w. rafferwealthmanagement.com
e. [email protected]
Steward Partners
115 W. Century Rd, Suite 145
Paramus, NJ 07652.
1https://www.reuters.com/markets/trump-tariffs-draw-global-promises-counter-measures-2025-04-03/
2 https://www.investopedia.com/terms/t/tariff.asp
3 https://www.bbc.com/news/articles/c1jxrnl9xe2o
4 https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security/
5 https://www.fidelity.com/learning-center/trading-investing/corrections
The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
AdTrax 7816201.1 Exp 4/2026