After Liberation Day, what next?

April 20th is the date to watch. Here's why.

L'etat, c'est Trump

Here are direct quotations from President Trump's executive order establishing the new tariffs regime.

"Large and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base; inhibited our ability to scale advanced domestic manufacturing capacity; undermined critical supply chains; and rendered our defense-industrial base dependent on foreign adversaries."[1]

Despite these economic calumnies, the US remains the world’s richest country, the world’s pre-eminent military power, and the world’s cultural powerhouse. But America’s problems are not a consequence of America’s choices. Instead they are the consequence of bad faith on the part of both its adversaries and its friends, who keep their populations poor in order to swindle Americans:

"Large and persistent annual U.S. goods trade deficits are caused in substantial part by a lack of reciprocity in our bilateral trade relationships. This situation is evidenced by disparate tariff rates and non-tariff barriers that make it harder for U.S. manufacturers to sell their products in foreign markets. It is also evidenced by the economic policies of key U.S. trading partners insofar as they suppress domestic wages and consumption, and thereby demand for U.S. exports, while artificially increasing the competitiveness of their goods in global markets.  These conditions have given rise to the national emergency that this order is intended to abate and resolve."[2]

We are all now poorer as a consequence of Liberation Day. If you have a pension, you will have noticed that it has lost around one tenth of its value in the week since the tariffs were announced. Savers can expect several interest rate cuts this year. If central banks decide not to cut their base rates, it will be due to a decision to respond to policy-induced higher inflation. The global economy faces stagflation or outright recession.

Equity markets are on hair-triggers, responding violently to rumour and fake news. Corporate and government bond markets are barely any less volatile. According to Mr Trump, the world must take its medicine, as it is the non-American world's collective fault that stock markets are over-valued.

The next dose of medicine could come on April 20th. On that day, the Department of Homeland Security will report its recommendations to the president on whether he can or should use the Insurrection Act of 1807 to enhance border security. Mr Trump said in campaign rallies that he would use the Act. One of his first executive orders on taking office was to command the DHS to review its utility for this purpose.

Invoking the Insurrection Act allows the president to call up the military including the Army, Marine Corps and National Guard to maintain civil order and border security, and to enhance the role of Northern Command, established after 9/11 to coordinate military and civilian authorities.

Mr Trump has already extended Northern Command's mission, by executive order, "to seal the borders and maintain the sovereignty, territorial integrity, and security of the United States by repelling forms of invasion including unlawful mass migration, narcotics trafficking, human smuggling and trafficking, and other criminal activities."

"Other criminal activities" could include a broad interpretation of acts including for instance vandalism of Tesla property or vehicles, or curbing civilian unrest. There have been protests against the president in several US cities. After April 20th, will Mr Trump tolerate these any longer, when he can simply order the military to disperse them?

Mr Trump has repeatedly described the US as being in a state of emergency. This is his justification for bypassing Congress and ruling via executive orders. If Mr Trump can invoke the Insurrection Act to enable him to carry out his campaign promises, do you think he will demur from doing so?

Business leaders who thought that the threat of tariffs was only a threat, a maximalist negotiating ploy, were rudely awakened last week. It is clear to all that Mr Trump is not kidding. He has already threatened to double down on governments that respond with counter-tariffs. Don't bet against him invoking the Insurrection Act on April 20th.

How will US businesses and global markets, reeling from Liberation Day, react to Insurrection Day? Not positively, I venture to suggest, because they would justifiably interpret invocation of the Insurrection Act as a lurch to authoritarianism which would undermine market freedom. Observe and compare recent events in Türkiye.

April 20th marks 90 days of Mr Trump's second term in the White House. There are three years and nine months more to go after that. At this point, prediction has become impossible. Many non-US businesses are switching to risk management, which means reducing exposure to the risk, be that US policy, US trade or even the USD itself. None of what is happening is good for trade, and therefore it is not good for shipping.

[1] https://www.whitehouse.gov/presidential-actions/2025/04/regulating-imports-with-a-reciprocal-tariff-to-rectify-trade-practices-that-contribute-to-large-and-persistent-annual-united-states-goods-trade-deficits/ accessed 03 April 2025

[2] Ibid.