April Publications
The Effects of Tariffs
Written By: Harini Jayaram
April 2025
Trump's protectionist policies aim to reduce the U.S. trade deficit, which was nearly $300 billion with China in 2024. By imposing tariffs, he hopes to lower the value of imports to match that of exports and encourage companies to shift manufacturing to the U.S., to create jobs. However, Instead of creating jobs, the combination of tariffs and inflation seem to be leading the US in a recession, in which companies are laying off workers and closing applications for instability of the economy. The tariffs also protect U.S. industries from foreign competition and are used as political leverage, particularly to pressure countries like Mexico to respond to fentanyl smuggling. Nearly 74,000 people died of drug mixtures containing fentanyl in 2023. The tariffs are meant to protect from foreign competition by raising the prices of selling foreign goods in the US, giving American made products a leeway, especially from cheaper foreign labor. Lastly, tariffs generate government revenue, but they only account for about 2% and are unlikely to significantly reduce the $31.5 trillion national debt. Individual income tax accounts for nearly 51% of federal revenue is likely to not be affected, despite Trump’s campaign promise to do so.
Tariffs can trigger trade wars, as seen when U.S. farmers lost $25.7B from retaliation, prompting $20B in government aid. They act as economic pressure to reduce trade deficits. There are also new political alliances with these tariffs. Like the united auto workers endorsed Harris in the 2024 election, and are now supporting tariffs and how they can be a useful tool for workers, since it raises the price of foreign goods that are often made with cheaper labor. In the senate, 4 republican senators joined the democrats in voting to terminate the national emergency declaration, essentially voting against tariffs on Canada. Market uncertainty has also led to stock volatility, with investors pulling out due to the unpredictable impact on businesses, as seen in how even successful companies were affected on April 10th with the decline in stocks.
In the short term, some industries may benefit since Trump aims to reduce steel imports to boost U.S. steel jobs, as shown by the link between rising imports and job losses. However, countries like China may retaliate, hurting U.S. industries reliant on exports, such as farming. Sectors like mining and car manufacturing may face layoffs due to higher costs, and 5.6 million jobs tied to foreign markets are at risk. Tariffs also disrupt supply chains, leading businesses, especially small ones, to pause operations during the uncertainty of how tariffs will affect their business costs.
Works Cited
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