Make Tariffs Great Again?

Written by Hannah Oommen on January 18th, 2025.

Recently, those of us who have been tuning into the political news in America have heard the word tariffs thrown around quite a lot but don’t understand what it means or its significance to our economy and international trade. So, what are tariffs? Tariffs are defined as a tax or duty on imported goods or services. During the 2024 presidential election, former President and Republican candidate Donald J. Trump proposed his plan to raise tariffs, claiming it would positively affect the U.S. economy. Vice President Harris criticized his plan, countering it with her data, which predicted extreme inflation. Ultimately, the topic became a focal point in the political debate, as many U.S. citizens have been concerned with the economy, especially with rising inflation and its impacts on the cost of living. 

For example, imagine two countries: China and the US. If China wanted to sell a table to the US, China would have to pay an extra amount due to the tariff. The reason? First, tariffs help the US government earn money, and they also help decrease competition between Chinese and American goods. They allow American businesses to avoid lowering their prices to match those of foreign competitors. From reading this hypothetical, tariffs sound great; however, they have their own issues. Increasing tariffs can cause foreign conflict. There is also a common misconception that foreign countries pay for the entirety of tariffs, but it’s not just them; it also includes consumers, importers, and businesses that rely on those imported goods. Thus, tariffs benefit the US economy but must be regulated carefully, not drastically, to increase the prices of goods Americans rely on. 

Trump has used tariffs during his 2016-2020 administration. From 2018 to 2019, Trump imposed tariffs on over $360 billion of Chinese imports as part of a broader trade war. These tariffs targeted various goods, including electronics, machinery, and consumer products, with rates ranging from 10% to 25%. Trump claimed that the tariffs were necessary to combat China’s unfair trade practices, such as intellectual property theft. Yet, China retaliated against the US by reducing the amount of agriculture purchased, restricting U.S. businesses, and imposing more tariffs. 

In 2019, following a World Trade Organization ruling on illegal subsidies to Airbus, a European aerospace company, Trump imposed tariffs worth 7.5 billion on European goods, including wine, cheese, and aircraft parts. This escalated tensions with the European Union but reinforced Trump's push for fairer trade practices. In 2018, a 25% tariff was imposed on steel imports and a 10% tariff on aluminum imports under section 232 of the Trade Expansion Act, citing national security concerns, aimed to bolster U.S. steel and aluminum industries. Countries like the EU, Canada, and Mexico retaliated with tariffs on U.S. goods. 

The overall impact of these decisions surrounding tariffs was higher costs of U.S. household goods, from $600 to $1000. This helped protect the security of some jobs but threatened those working in industries dependent on global supply. In addition, many farmers were directly hurt by the tariffs on China but were granted subsidies from the Trump administration. 

(during his presidential election)

As the newly elected president for the 2025-29 term, Donald Trump has proposed a dramatic expansion of tariffs as a central to his economic policy. His plan includes a “universal” 6o% tariff on all imports and a 60% tariff on imports from China. 

This proposal is part of his border vision to reduce dependence on foreign goods and bolster domestic manufacturing. However, estimates predict a 1.3% decline in U.S. GDP as a direct result of the tariff increases. Retaliatory actions by trading partners could exacerbate these effects, further impacting exports and economic stability. Trump’s tariff plan is intended to improve social welfare; he stated one of his first executive orders would be to place a 25% tariff on all goods from Mexico and Canada. Trump claims this is a negotiation tactic that will help with the fentanyl and immigration crisis. Nevertheless, it could potentially harm the prices of goods for Americans.

Trump’s plan builds on his past policies, where he justified tariffs for national security reasons using measures like Section 232 of the Trade Expansion Act of 1962. He also hopes to use the legislative branch to make his tariff policies more permanent and irreversible by future administrations.

The impacts of these policies are unforeseeable. Some argue that they will revitalize specific industries and secure more domestic jobs, while others critique the increased cost for businesses and consumers. Some go as far as to say that Trump’s tariffs could potentially disrupt global trade relations. As he steps into office on January 20th, the citizens of America will have to wait and see the potential this billionaire businessman will have on the economy and the future of the United States of America. We will have to tune in and see how this recent buzzword impacts Americans.