As Donald Trump threatens to impose heavy tariffs on numerous countries—and has already implemented many of these threats against Canada and Mexico—he boasts that his administration’s import taxes will be a blessing for the U.S. economy. However, the reality contradicts this claim.
The United States is currently the world’s largest importer of goods. In 2022, the total value of imported goods reached $3.2 trillion. In 2023, the U.S. imported approximately $1.2 trillion worth of goods from Canada, Mexico, and China combined.
Economists argue that Trump’s tariffs will increase inflation, slow economic growth, and harm American workers—ultimately leaving American consumers to foot the bill. Joseph Stiglitz, a Columbia University professor and Nobel laureate in economics, stated, “Almost all economists believe the impact of tariffs will be very bad for the U.S. and the world, and they will almost certainly be inflationary.”
On Inauguration Day, Trump threatened to impose a 25% universal tariff on all imported goods, including oil and agricultural products from Canada and Mexico, starting February 1st. His justification: “They’re letting in too many people and allowing fentanyl to flow in.” Trump also warned China of a 10% tariff unless it halts fentanyl and other drug exports. However, after fierce backlash from Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, the Trump administration temporarily suspended the tariffs for 30 days, even as it kept the long-term threat of a 10% tariff on Chinese goods on the table.
Tariffs, trade tensions, fears of retaliation, and the risk of a full-blown trade war will undoubtedly lead many businesses to cut back on planned investments, harming economies worldwide—especially small businesses in the U.S. Marcus Noland, executive vice president of the Peterson Institute for International Economics, warns, “The impact of these tariffs will be a slowdown in U.S. economic growth and a rise in inflation.” Worse still, if other countries retaliate with their own tariffs, the economic damage could spiral further.
Trump insists that his aggressive trade policies will be a win-win for Americans. But this belief is nothing more than wishful thinking. His tariffs will harm American manufacturers, farmers, and workers alike. For example, Canada’s and the U.S.’s automotive industries have been deeply integrated for 60 years. If the White House reimposes a 25% tariff on all auto parts and products from Canada and Mexico after the 30-day suspension, the consequences will be severe. Many auto components cross the border up to eight times before being assembled in a final vehicle. A piece of steel may be shipped from Mexico to the U.S. to be molded into a carburetor part, then sent to Canada for further processing, then back to Mexico for final assembly, and finally sold in the U.S. If a 25% tariff is applied at each stage, the cumulative effect will skyrocket the cost of the final product—hitting American consumers directly in their wallets.
The impact will be even more pronounced on goods imported from China. Consumer electronics, telecommunications and computer chips, clothing, and many everyday essentials—many of which are purchased by Trump’s own voter base—are imported from China. The rising costs of these daily necessities will be felt most by ordinary Americans.
One major consequence of tariffs is that consumers end up paying more to the government when purchasing imported goods. This, in turn, leaves them with less money to spend on other products, harming manufacturers and retailers. While Trump and his supporters claim that universal tariffs will “revive industry”, in reality, they will have the opposite effect. By reducing manufacturing efficiency compared to global competitors, tariffs will weaken American industries instead of strengthening them.
Another alarming issue is the risk of retaliation from other countries. If central banks raise inflation rates in response to tariffs, the U.S. Federal Reserve will be forced to hike interest rates. This could lead to the worst-case scenario: rising interest rates alongside economic stagnation—creating stagflation.
This could also directly undermine one of Trump’s key economic goals: tax cuts for large corporations and deregulation. If tariffs drive inflation higher over the next two years, the Federal Reserve will have limited room to cut interest rates in 2025. This would dash Trump’s hopes of pressuring the Fed into swift rate reductions—another example of his policies backfiring on the very voters he promised to help.
Currently, Trump’s administration appears to be considering a two-phase tariff strategy:
- A short-term wave of tariffs targeting countries like Mexico, aimed at reducing the flow of migrants into the U.S.
- A long-term wave of broad tariffs on China, intended to generate revenue and boost domestic industry.
However, these two waves could trigger a domino effect. The first wave will make it harder for U.S. industries to find enough workers, as many laborers in American manufacturing and agriculture are undocumented immigrants or Latino migrants, whom Trump’s policies are set to expel.
Given these realities, many Americans may start questioning how Trump’s tariffs— which will inevitably increase costs for consumers—align with his promise to lower prices. Trump’s advisors and lobbyists must answer how tariffs will supposedly help American workers while also financing trillions in tax cuts for the ultra-wealthy. If these tariffs are being imposed to offset tax cuts for billionaires, doesn’t that cancel out any supposed benefits for the working class? After all, lower-income Americans spend a disproportionately high percentage of their income on consumption, meaning they will bear the brunt of higher prices caused by the trade war.
Ironically, these very Americans—Trump’s core supporters—were the ones who filled stadiums at his rallies and legitimized his candidacy. Now, they will be the ones paying the price for his reckless trade policies.
