April 2, 2025 will be remembered as one of the most consequential days in modern trade policy. In what President Trump called "Liberation Day," he announced sweeping reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA) that would ultimately push China tariffs to 145% and trigger the 2025 stock market crash.

The Liberation Day Announcement

Speaking from the White House, Trump claimed unprecedented tariff authority under IEEPA to impose country-based "reciprocal tariffs" on imports from almost all countries. The announcement built on tariffs already imposed in February (10% on China) and March (raised to 20%), dramatically escalating the trade conflict.

Under the Liberation Day order, China faced an additional 34% tariff, which Trump justified by accusing China of tariff and non-tariff trade barriers totaling 67%. Combined with existing duties, China's minimum tariff rate would eventually reach 145%—unprecedented in modern history.

The Market Crash

Markets reacted with alarm. In the days following Liberation Day, stocks plunged as investors grappled with the prospect of a full-scale trade war with multiple trading partners simultaneously. The 2025 stock market crash forced Trump to reconsider the pace of implementation.

Trump later told reporters, "I thought that people were jumping a little bit out of line … You know, they were getting a little bit yippy, a little bit afraid." He acknowledged watching the volatility in the bond market before deciding to act.

The April 9 Pause

On April 9, just one week after Liberation Day, Trump announced a 90-day pause on the additional country-specific tariffs. The market response was immediate and dramatic: the S&P 500 rose 9.52%—its largest one-day gain since 2008.

Under the pause, the 10% baseline tariff remained in effect for all countries, but the higher country-specific rates were suspended. China, however, was explicitly excluded from the pause, maintaining tariffs at 145%.

Treasury Secretary Scott Bessent explained that the pause was meant to provide time for "bespoke negotiations" with each country. This set the stage for the bilateral deals that would follow, including the US-EU Turnberry agreement in July.

Retailer Warnings

By April 21, CEOs of major US retailers issued urgent warnings to the White House. They cautioned that the trade war with China would lead to "visible price increases and product shortages in two weeks." The warnings highlighted the real-world consequences that were beginning to materialize.

Consumer prices for Chinese goods did increase, though the May trade deal and subsequent pause prevented the most severe scenarios. However, the uncertainty itself proved costly, as businesses struggled to plan around rapidly shifting tariff rates.

Legal Challenges

Liberation Day triggered immediate legal challenges to Trump's use of IEEPA authority for tariffs. On May 28, the Court of International Trade declared the executive orders implementing both the fentanyl tariffs and the reciprocal tariffs invalid as contrary to law, permanently enjoining them.

The administration appealed, and the legal challenges were consolidated into the case Learning Resources v. Trump. The Supreme Court heard oral arguments on November 5, 2025, with a decision expected in 2026.

Lasting Impact

Liberation Day fundamentally changed the landscape of global trade. While the most extreme tariff rates were eventually moderated through bilateral negotiations, the episode demonstrated both the power and the limitations of aggressive tariff policy.

The 10% baseline tariff established on April 5 remains in effect, representing the largest sustained increase in US import duties since the Smoot-Hawley Tariff Act of 1930. For businesses, the message was clear: trade policy volatility is the new normal.