One Year After "Liberation Day": How Trump's Tariffs Reshaped Global Markets and What Investors Are Doing Now

Exactly one year ago, President Donald Trump walked into the White House Rose Garden and announced the most sweeping tariff policy since the Great Depression — a moment his administration dubbed "Liberation Day." The announcement triggered the largest global market decline since the COVID-19 pandemic crash of 2020. Twelve months later, markets have recovered, but investors have fundamentally changed how they think about American assets.

What Happened on April 2, 2025

Trump imposed a 10% baseline tariff on all imports, along with higher "reciprocal tariffs" on dozens of countries: 34% on Chinese goods, 20% on EU products, 46% on Vietnam. Within days, China announced retaliatory tariffs of 34% and suspended imports from select American companies. Global stock markets entered freefall. The S&P 500 plunged as bond yields spiked in a scenario analysts called "bond vigilantism" — investors simultaneously selling US stocks, bonds, and the dollar.

On April 9, Trump paused the reciprocal tariffs for 90 days (except for China, whose minimum rate was raised to 145%), triggering a 9.52% single-day S&P 500 rally — its largest gain since 2008. By mid-May 2025, the index had turned positive for the year.

Where Things Stand Now

The picture today is more complex. The average effective US tariff rate, which hit an estimated 27% at its peak, has settled at 13.7% following trade deals with the EU, UK, India, and Switzerland, and a February 2026 Supreme Court ruling invalidating some tariffs. New Section 301 investigations against a dozen trading partners, including China and Japan, have been launched, meaning further tariff escalation remains possible.

For companies, the impacts have been uneven. General Motors says its net tariff burden in 2026 will be lower than 2025's $3.1 billion hit. Procter & Gamble CFO called tariffs "a 5-point headwind to core EPS growth." Dollar Tree and Gap are managing inventory carefully. Toyota, Nissan, and Honda have all accelerated US manufacturing plans.

The "Sell America" Trade

The most consequential shift has been among international investors. According to AJ Bell analysis, the Shanghai Composite, South Korea's Kospi, and Japan's Nikkei 225 have all outperformed every major US index since Liberation Day. The MSCI USA index has risen 14% in sterling terms since April 2025 — underperforming the MSCI All Country World Index, which gained 18%.

"Investors do seem to have thought carefully about where to allocate capital in a post-Liberation Day world," said Russ Mould of AJ Bell, noting that many are now deliberately excluding the US when seeking new funds. The "ABUSA" trade — Anywhere But the United States — has become a genuine portfolio strategy.

What's at Risk in 2026

Bank of America economists have coined the acronym "TATA" — Trump Always Tries Again — as a counterweight to the more optimistic "TACO" (Trump Always Chickens Out). With new Section 301 investigations underway, the inventory cushion that protected consumers in 2025 now depleted, and the Federal Reserve under political pressure over interest rates, analysts see multiple paths to renewed volatility. The US national deficit is projected to hit $1.9 trillion, and Trump's ambitions for Greenland could yet resurface as a trade lever.