April 2 will be Liberation Day in Donald Trump’s America; here’s what it’ll mean for investors

Tomorrow (April 2, 2025) is being touted as Liberation Day by the Trump administration. In many countries, the term is utilised for their liberation from oppressive regimes – often leading to that nation’s newfound independence.

But this term is being employed for April 2 because it will free the United States from certain imported goods. During Trump’s campaign, he said that his inauguration day would be liberation day, but has now re-employed the term for the day when he will unveil tariffs like few have seen before.

Liberation Day

The Trump administration think the trade balance is too shifted in far of imports and that too little is made in America.

‘We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years. They’ve taken so much out of our country, friend and foe. And, frankly, friend has been oftentimes much worse than foe,’ the President said last week.

Hasn’t he already announced tariffs? Yes, some have been announced, including on imports from China and Canada. But more will be unveiled including on countries where there have not been tariffs before. The President’s hope is that people will buy more American goods because American goods will be more price competitive (in theory) because they will not be subject to tariffs.

What does it mean for investors?

Well first and foremost, it would be reasonable to expect a major decline in the US market indices on Wednesday (their time) and likely on the ASX on Thursday as a result of ‘Liberation Day’. Many individual stocks will follow suit in all likelihood, but there may be some beneficiaries. Some examples might be companies that manufacture in the US like Austal (ASX:ASB) which builds ships in the US.

But it may be a problem for companies which export into the US like dairy producer A2 Milk (ASX:A2M) – only 3 years after it benefited from getting special access due to infant formula shortages – and Fisher and Paykel (ASX:FPH) that makes healthcare products in Mexico just for the US.

In the medium term, the tariffs which will be unveiled on liberation day will continue to be felt by the individual companies and likely in the broader US economy. Economists suggest they could cause a recession. Art Laffer has estimated that automobile tariffs could increase vehicle costs by US$4,711, just to name one example. Jessica Riedl, a senior fellow at the Manhattan Institute, has declared these tariffs would be the largest tax increase since World War II.

And what many forget is that the liberation day tariffs could impact other countries that rely on the US. Canada and Mexico in particular could be impacted.

The impact on Australia

Of course Australia will be impacted by Liberation day tariffs, but it may cop less of an impact than companies such as Canada. It will all depend on what is unveiled on Liberation Complicating matters is the Australian election campaign, meaning the government is in ‘caretaker’ mode for the next few weeks. Regardless of who wins, the tariffs will be a major cause of concern.

The AFR is reporting that 2-8% tariffs are possible. Lower than the 25-100% rates suggested on other countries, but with $30bn of goods exported to the US it could have an impact. Already, there have been tariffs on steel and aluminium like the rest of the world, but beef and pharmaceuticals are a cause of concern as they are the largest exports from Australia to the USA.

Conclusion

Investors should brace for an impact on so-called Liberation Day and thereafter. The specific impact on companies will depend on whether or not they sell goods in the US and whether they manufacture there or make elsewhere and ship to the US. No company is safe from any potential impact, so watch this space closely.

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