(Yahoo! Finance) - A year ago, President Trump enacted sweeping tariffs that hit more than 100 trading partners, allies and economic adversaries alike, in a monumental shift away from the global economic order.
Responding to what the White House deemed an economic emergency, the tariffs were sold as a way to spark a manufacturing renaissance and rejigger a rigged trade regime. America first, in a nutshell.
It's easy to pinpoint that period on a zoomed out, five-year stock chart because on a screen it looks like a disaster. Some policy analysts might describe it that way too. Judging the trade upheaval by the numbers and the administration's stated goals — of jobs growth, trade surpluses, and merely transitory inflation — shows the protectionist swerve fell short of its aims.
The record is messy and mixed. But so much has changed in a year, from the rollbacks and trade deals to a thundering Supreme Court decision and the reverberations of the war in Iran.
Here's a look back at one of the most important days for investors and what we can take away from "Liberation Day."
Where we are now
The average effective tariff rate stands at 11.0%, according to the Yale Budget Lab, marking the highest level since 1943, not including last year's peak.
President Trump reissued a 10% global tariff in February after the Supreme Court struck down the use of his emergency powers to enact sweeping "reciprocal tariffs.”
On Thursday, new data from the Commerce Department showed that the US trade deficit jumped almost 5% in February to $57.3 billion, an increase from January's $54.5 billion. And even as trade figures were volatile last year as importers scrambled to react to shifting policies, the US trade deficit remains similar to what it was on April 2, 2025.
There and back again: A market journey
Following erratic trade policy last year may have felt disorienting. The Dow plunged almost 1,700 points and the S&P 500 shed almost 5% in a single day, echoing the chaos of the early phase of the COVID pandemic.
But once Trump backed down from executing the most devastating levies, markets began their march upward. In a sudden reversal, Trump walked back dozens of country-specific tariffs, sending Wall Street into a dizzying rally.
Where Congress and public opinion failed to keep the president from pursuing a trade overhaul, markets acted as a powerful restraint. Trillions of dollars in stock losses and a surge in Treasury yields appeared to persuade Trump to change course.
In the weeks that followed, markets continued to rally on news of coming trade deals with other nations, agreements to negotiate further, and inklings of a detente with Beijing.
AI bullishness and muscular corporate earnings overrode lingering trade drama. And the doldrums of last April gave way to S&P 7,000.
What we've learned
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Liberation Day showed the strength of the TACO trade ("Trump Always Chickens Out") as a tool for understanding US policy and informing investment strategies. But the market response to the Iran war highlights the limits of that framework too. Unlike a trade war, the president has less of a say about when an actual war will end.
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The Fed is still watching tariff inflation wind its way through the economy. During the Fed’s policy meeting last month, Chair Jerome Powell said he sees some progress on inflation: “It should come as we start to see in the middle of the year, progress on tariffs — going through once and then tariff inflation coming down.”
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Combined with the energy disruption in Iran, that progress may be undermined, and instead of a rate cut, there's growing chatter about the possibility of a rate hike if pricing pressures worsen.
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Globalization isn't dead, and job losses in American manufacturing have continued to be significant. Trade flows and supply chain sourcing shifted, and alienating traditional trading partners has spurred other nations to strengthen ties with China.
3 lingering questions
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How can the Fed separate inflation winding down from tariffs from the new oil shock — and is that even possible or useful?
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Is the tariff washout — a chaotic phase that the market now registers as a blip — a useful model to understand the consequences of the Iran war?
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What will a new high-tariff era accomplish?
By Hamza Shaban - Senior Reporter
