Disclaimer: This article concerns topics that are changing very rapidly. Information may be outdated by the time of publication.
President Trump signing an executive order on January 20th. EdNC
In President Donald Trump’s first term in the Oval Office, he instituted various protectionist tariffs as a part of his “America First” economic policy. These tariffs included a twenty-five percent tariff on steel, a ten percent tariff on aluminum, and a myriad of tariffs on Chinese goods, leading to an ongoing trade war with China. In doing so, he attempted to reduce our trade deficit (the difference between the value of our imports and the value of our exports), and spur domestic production. Although our trade deficit did decrease until the pandemic, the impacts that the tariffs had on the U.S. economy were equivalent to one of the largest tax increases in decades. This was coupled with a decrease in U.S. workers’ real income, their income after inflation. President Biden did not change or remove most of these tariffs, and in fact exacerbated many of them, including those against China. As we move into Trump’s second term, it is vital to understand the tariffs that Trump plans to enact and the impacts that they will have on the U.S. economy.
During his 2024 presidential campaign, Trump called for universal tariffs as high as ten or twenty percent on every single import to the United States. He asserted that they would create more factory jobs, shrink the trade deficit, and lower prices for consumer goods. While tariffs are often successful at growing jobs, especially those in manufacturing, the American consumer will suffer the most as a result.
When an American company wishes to import goods manufactured abroad, they pay the tariff directly to the U.S. government when the goods are imported. Due to the extra cost of importing, the company will raise prices to maintain its profit margins. This is the exact opposite of what Trump claims, stating “Trillions and trillions of dollars pouring into the United States Treasury […] China paid hundreds of billions of dollars during my term.” This is an incredibly false and misleading statement, meant to distract the American consumer, his voters, from the fact that they are the ones who end up paying the tariffs. If Trump decides to follow through with his plan for a ten or twenty percent universal tariff, the consumer will end up seeing price increases of the same amount on nearly every purchase they make. While strategic and targeted tariffs can be vital for protecting American jobs and domestic industry, Trump’s plan will be a direct tax on his own people that will achieve the opposite of his goals.
In addition to the proposed universal tariffs, Trump has announced plans to impose a sixty percent tariff on Chinese goods, intensifying trade tensions between the world’s two largest economies. This aggressive stance is expected to disrupt global supply chains, leading to increased production costs for U.S. businesses that rely on Chinese imports. Consequently, American consumers may face higher prices on an incredibly wide range of products, given that China is the source of over forty percent of imports into America. Moreover, such sweeping tariffs risk provoking retaliatory measures from China, potentially harming U.S. exporters and escalating the already tense trade war.
While Trump promises that these measures will boost manufacturing and cut our reliance on imports, the reality for American consumers could be much harsher. Prices on everything from groceries to electronics are likely to climb, hitting lower- and middle-income households the hardest. Retaliation from trading partners would greatly hurt U.S. exports, making it even tougher for American companies to compete globally. Businesses facing higher costs might cut investments or squeeze their workers to make up the difference. Additionally, his universal tariff plan would apply to many industries that do not or can not exist in America, levying pointless taxes on American consumers that will do nothing to promote domestic industry. Though the tariffs have been pitched as a way to strengthen the economy, they will likely do the opposite: slowing growth and putting more unwanted financial pressure on American families.
As of January 23, President Trump has stated that he will enact a twenty five percent tariff on goods from Mexico and Canada, due to those nations allowing “mass numbers of people to come in and fentanyl to come in.” He additionally stated that he will put a ten percent tariff onto Chinese imports, “based on the fact that they’re sending fentanyl to Mexico and Canada.” However, he stated that these tariffs will not be imposed until February 1.
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