After taking on the White House for his second tenure, US President Donald Trump has announced a series of tariffs. This move encourages American consumers to go ‘made in America,’ but what does it mean for the rest of the world?
Many critics have already expressed great dissatisfaction with these import taxes, which might cause global economic chaos. They also have the potential to make goods more expensive for American buyers in the future.
Brief Introduction to Tariffs
Tariffs are taxes charged on goods imported from other countries. It is a percentage of the total amount of the product’s value.
For example:
If the cost of a product is $10, and the tariff percentage on it is 10%, a total of $1 will be added to the product’s cost. The final price will be the (cost of the product + tax amount), i.e., (10 + 1)$, which is 11$.
Companies or traders who import foreign goods to the USA need to pay this tax to the government.
Why Donald Trump is Imposing Tariffs in 2025?
As per the POTUS, tariffs on foreign goods will make consumers buy more ‘made in America’ products, boosting the economy of the Nation. Simultaneously, this move will also increase the amount of taxes raised and lead to more investments.
As per his view, foreign nations have taken advantage of the huge American consumer base by exporting goods to the country for years. He wants to impose tariffs to minimise the gap between the value of imported goods and exported goods from the USA to other nations.
Let’s Understand the Progress of the Tariff Measures Taken by Trump
14 February: Changing US tariffs and trade policies might affect the global economy and supply chain. According to the International Monetary Fund, a 10% increase in US tariff rates could affect the GDP of the nation by approx. 1% and around 0.5% by 2026.
27 February: The result of the increased tariff rates could directly affect American consumers. They can face a significant price increase for imported goods.
6 March: A quick pause in tariffs was announced by Trump. A one-month respite for goods traded under the US-Mexico-Canada Agreement (USMCA) was negotiated during his 1st tenure as President. As per this, most exported goods from the neighboring countries to the US will not be imposed to these tariffs.
12 March: Trump announced 25% tariffs on steel and aluminium imports to the nation. Due to this, there might be a potential rise in prices of various products, including automobiles and even canned sodas!
3 April: Trump administration announces a minimum of 10% tariff on all trading countries, but even higher tariff rates for areas like EU, China, and Japan.
9 April: Trump imposes an additional 50% tariffs on China, which takes the overall increase to 104%! Henceforth, China announced an 84% tariff on US import goods. This could mean a trade war, which can affect the global economy at large.
24 April: According to JP Morgan research, the imbalance of tariffs, 10% universal and 110% on China, can reduce the global economy by 1%.
8 May: Implementation of a trade framework between the USA and the UK considers reducing import taxes on British cars and a tariff-free quota on beef. Though the base 10% tariff will remain for all other goods.
3 June: After the Court for International Trade stated that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are unlawful, the effective average tariff rates could settle somewhere between 15% to 18%.
Tariffs Announced By Donald Trump
Import Tax on Steel and Aluminium
The USA is the largest importer of steel globally, importing the bulk of it from Canada, Brazil, Mexico, and South Korea. Effective from 12 March, a 25% import tax was announced on all steel and aluminium, including products of these metals.
EU Products
Initially, Trump decided on a 20% tariff on most goods from the EU, but settled for 10% till 8 July to make way for trade talks. Later, he extended this deadline to 9 July.
China-US Trade
Trump imposed higher tariff rates on China of almost 104%, which led to a heated discussion between him and President Xi of China. This escalation led to a 145% tariff increase on Chinese imports to the US. Subsequently, the Chinese government introduced 125% import taxes on US products.
After the Geneva discussion, both countries agreed to suspend some tariffs and cancel others altogether. Since then, both parties have been accusing each other of agreement violation.
Tariffs on Canada and Mexico
In February, the Trump administration introduced 25% tariffs on Canadian and Mexican imports and another 10% levy on Canadian energy. Consequently, the Canadian government in April introduced a 25% tax on imports of some US cars.
What Does an Increased Tariff Mean for Both American & Global Consumers?
‘Trump Cannot Keep Calm’ as some American newspapers subtly pointed out, yes, American daily, you read that right. The after-effects of Trump’s tariff talks and abrupt announcements have taken the global economy to a volatile point. This includes the stock markets, which got hit with market price changes. Many people, directly and indirectly involved in trading, trading-related companies, pensions, and interest rates, were affected.
Not just globally, but American consumers are going to face price increases for various imported goods. Many companies are refusing to import foreign goods, which can make already available products more expensive. The cost of products made in the US using foreign supplies is also set to rise. Companies like Adidas and Mattel (maker of the famous Barbie dolls) have decided to charge Americans more.
After enjoying a strong growth in the last quarter of 2024, the US economy decreased in the first four months of 2025. Even the dollar, still considered a safe asset, has fallen in value recently. The International Monetary Fund (IMF) reduced its prediction of global economic growth in 2025 due to the introduction of tariffs.
Though Trump insists on the success of his ‘Liberation Day’ policies of tariffs, his own people believe otherwise. Many in the Republican Party have already changed teams and joined the Democrats. World leaders have strongly opposed to the idea of higher import tariffs, and are strongly condemning his steps.
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