An Overview of Liberation 2.0

August 4th, 2025
Andrew Lu

On August 1, the Trump administration enacted a sweeping new tariff regime—often called “Liberation Day 2.0”—affecting approximately 69 countries. Average US tariff rates surged from under 3% to around 18%, up from roughly 2.3% last year, marking the most dramatic single-day escalation in decades.

Key Tariff Hikes & Sector-Specific Changes

A baseline 10% tariff was imposed on imports from most nations not under special rates, replacing previous exemptions.

Major reciprocal tariffs were set at:
- 35% on Canadian goods—not covered by USMCA’s narrow exemptions.
- 50% on Brazilian imports, particularly soy and beef, tied to political concerns over Bolsonaro.

Iran, Laos, Algeria, and even microeconomies like Lesotho faced tariffs as high as 50%, despite negligible US trade volume.
Industrial metals such as copper faced standalone tariffs of up to 50%, and pharmaceuticals (especially generics) saw surcharges approaching 200% under earlier threats.

Impact on China, Mexico, and Canada:

Canada: Tariffs rose from 25% to 35% starting August 1 for non-USMCA imports, based on alleged fentanyl-trafficking concerns, even though USMCA-compliant goods remain exempt.
Mexico: Initially granted a 90‑day extension during talks, but expected to face a permanent 30% rate if no new agreement is reached. USMCA-compliant imports remain exempt.
China: Under continued negotiations, China’s import rate remains at a 10% baseline until August 12, when tariffs could rise reprised, possibly up to 20–30% or more depending on negotiations.

General Country-Level Changes

Europe & Japan & South Korea: After negotiation, some secured reduced rates (e.g., as low as 15–20%) and made pledges to purchase US goods or invest in US markets, exempting them from higher tariffs.
India & Taiwan & South Africa: Face 25–30% tariffs—India specifically a flat 25%—thanks to diplomatic fallout over India-Russia energy deals and trade deficits.
Other countries (including Vietnam, Indonesia, the Philippines): Initially threatened with high rates, but many negotiated down to roughly 19% baseline, tied to concessions like opening markets for US goods.

By the end of July, economists estimated Trump had generated $108 billion in tariff revenues over nine months, representing about 5% of federal revenue.

Broader Economic & Legal Context

US consumers have borne much of the new cost—analysts estimate the average household will pay $2,400–$2,800 per year more due to tariff‐driven price increases.
Immediate market reactions were severe: US stock indices fell sharply (Dow –1.2%, S&P –1.6%, Nasdaq –2.2%), while global equities also dropped.
Legally, a US trade court ruled in late May that the "Liberation Day" tariffs exceeded presidential authority under IEEPA, issuing a permanent injunction. That decision is currently pending appeal.

Conclusion

The August 1 tariff implementation dramatically reshaped US trade policy; from an average of 2–3% to 18% across major trade partners, with punitive rates as high as 50% or more on specific countries or sectors. Despite negotiations softening terms for some nations, most partners now face significantly steeper barriers than before. The economic fallout—from elevated consumer prices and strained supply chains to slower growth and fresh legal battles—suggests that these measures will leave lasting marks on global commerce and bilateral relations for years to come.

Extemp Analysis by: Ian Cheng

Question: What actions can countries take in response to the precedent set by Trump’s tariffs?

AGD: There’s a lot to work with here, Trump is an interesting guy.

Background: Illustrate the tariffs Trump placed on August 1st, especially the most significant and hard-hitting ones (Brazil and Canada). Explain what it means for the global economy by briefly explaining what other countries plan to do in response to Trump’s tariffs.

Answer: An interesting approach would be breaking down the unique situations of three different countries. Go with different “types” of situations to get the most out of the question. The picks below for countries are definitely changeable. Take into account the wording of the question, it is “what actions can” and not “what actions should”, so focus on more feasible solutions.

This is a prescriptive question, so substructure goes...

Problem (the precedent caused by Trump’s tariffs)
Solution (best way to deal with it)
Impact

Canada (big economy that didn’t negotiate a trade deal)
Japan (did negotiate a trade deal)
Lesotho (small economy where any deal went under the radar or didn’t happen)

For specificity, try and zero in on more unique problems. What difference does it make if a country did negotiate a trade deal versus if they didn’t? Does it mean they respond differently? Going with this helps to answer these questions and cover the vague wording of “countries” in the question.