Inflation has been one of the most worrying topics this year, affecting many Americans today. A lot of inflation today is caused by tariffs. A tariff is a tax levied on foreign goods imported into a country. These tariffs are caused by President Trump’s actions. On March 22, 2018, Trump signed a memorandum under Section 301 of the Trade Act of 1974, instructing the United States Trade Representative (USTR) to apply tariffs of $50 billion on Chinese goods. Trump said the tariffs would be imposed due to Chinese theft of U.S. intellectual property.
Tariffs directly affect the price of imported goods, which can lead to higher consumer prices and can alter trade dynamics and international relations. President Donald Trump signed a memo calling on his administration to determine “the equivalent of a reciprocal tariff with respect to each foreign trading partner.” This means the administration plans to impose tariffs on other countries that match the duties they impose on American products.
Trump previously announced tariffs on China, Mexico, and Canada. While the 10% tariffs on China have been imposed, Trump paused the 25% tariffs on Canada and Mexico. Trump has also announced 25% tariffs on steel and aluminum, which are expected to take effect next month. Many economists warn tariffs will likely raise the prices of goods for consumers, worsening inflation that already rose faster than expected in January.
Canada, for example, is a major exporter of crude oil, while Mexico exports many fresh fruits and vegetables. Mexico is also the largest auto parts exporter to the US. China is a major exporter of chips used in electronics such as phones and laptops. When tariffs push up the price of imports, that includes imported materials used to make other products domestically in the US. Higher prices for materials will eventually make their way to consumers.
Americans have been bracing for the impact tariffs will have on prices. In a November Harris/Guardian poll, nearly two-thirds of Americans said they expected prices to go up if Trump implements broad tariffs. U.S. inflation accelerated last month as the cost of groceries, gasoline, and rents rose. This was a disappointment for families and businesses struggling with higher costs and likely underscoring the Federal Reserve’s resolve to delay further interest rate cuts.
UPDATE: The paused tariffs on Canada and Mexico have been resumed and will take effect Tuesday, March 4, 2025. President Trump has threatened to impose 25% tariffs in response to what he says is an unacceptable flow of illegal drugs and migrants into the US.
A 10% tariff on Chinese imports is also expected to be implemented in response to US accusations that Beijing is not doing enough to stop the flow of fentanyl into the US.
Details from BBC: Speaking on Sunday Morning Futures on Fox News, Commerce Secretary Lutnick said: “There are going to be tariffs on Tuesday on Mexico and Canada. Exactly what they are, we’re going to leave that for the president and his team to negotiate.”
Canada has repeatedly said tariffs will harm both economies but added that it will defend itself if they happen. Industries have been preparing for the worst.
“Increasing tariffs from zero to 25 percent overnight is likely to be much more disruptive to those now highly integrated North American supply chains than anything President Trump did in his first term,” Mr. Bown said, reportedly from The New York Times.
Many industries depend on North American trade, but it is expected that automotive manufacturing could see the biggest impact. Canada and Mexico account for nearly half of U.S. car imports and exports, and an even greater share of the trade in motor vehicle bodies and parts. Oil and gas companies are also beginning to feel the effects of the 25 percent tariff on imported steel, which will go into effect March 12. Prices for products like the steel pipe that companies use to line their wells are already climbing in anticipation of the tariff.
Products that will be affected by these tariffs are below:
Now the big question is what is going to be the outcome of our economy?
Sources used:
- Aratani, Lauren. “Trump Tariffs: Which Countries Are Affected and What Does This Mean?” The Guardian, The Guardian, Feb. 2025, www.theguardian.com/us-news/2025/feb/01/trump-tariffs-explainer-mexico-canada-china.
- Geoghegan, Tom. US Tariffs on Canada and Mexico Will Happen on Tuesday, Says Commerce Chief. 3 Mar. 2025, www.bbc.com/news/articles/cn48q3150dxo.
- Wang, Selina, and Molly Nagle. “Trump Signs Memo to Determine Reciprocal Tariffs on US Trading Partners.” ABC News, 13 Feb. 2025, abcnews.go.com/Politics/trump-signs-order-determine-reciprocal-tariffs-us-trading/story?id=118792336. Accessed 3 Mar. 2025.
