Tariffs and Trade Wars
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Have you ever noticed prices rising at stores and wondered why that happened? While inflation is often blamed for rising prices, tariffs also contribute by making imported goods more expensive.
A tariff is a tax levied on imported goods, which increases the cost of foreign products. Governments utilize tariffs to protect local industries, decrease reliance on imports, and as a bargaining tool in trade negotiations. The Trump administration notably employed tariffs as a central component of U.S. trade policy, particularly in disputes with China, Canada, and the European Union.
How Tariffs Work
When a tariff is placed on imported goods, companies that source these products internationally must pay a tax. Tariffs can protect domestic industries by making imported goods more expensive, encouraging consumers to buy locally made products (Wiseman, 2025). They also generate government revenue and can reduce trade deficits by limiting imports. In some cases, tariffs may incentivize companies to shift production back to the U.S., potentially creating jobs in the long run.
However, tariffs also raise costs for businesses that rely on imported materials, such as automakers and electronics manufacturers (Zahn, 2025). Higher costs are often passed on to consumers through increased prices. For example, if an iPhone that typically costs $1,000 faces a 25% tariff, the new price would jump to $1,250—a significant increase that directly impacts buyers.
While tariffs can provide short-term protection for certain industries, they also risk slowing economic growth, disrupting supply chains, and straining international trade relationships (Banik, 2025). The long-term impact of tariffs depends on how businesses, consumers, and trading partners adapt. While they can disrupt trade and increase costs, tariffs encourage domestic production, create jobs, and reduce reliance on foreign goods, ultimately strengthening local industries.
The Trump Tariff Policies
In 2018, when Trump first became the U.S. President, he launched a trade war with China (Grantham, 2025). The U.S. imposed tariffs ranging from 7.5% to 25% on approximately $370 billion of Chinese goods. This move aimed to pressure China to adopt a fairer trade practice and bring jobs back to the U.S (Duggal & Ali, 2025).
In 2024, when Trump returned to power, he proposed reviving and expanding tariffs, including a 25% tax on steel and 10% on aluminum from Canada and Mexico (Grantham, 2025). These tariffs don’t just affect raw materials. Still, they impact the entire economy and several industries such as automotive, electronics, and construction, driving up prices on everything from cars to home appliances.
Who Gets Hit the Hardest?
Tariffs have far-reaching effects, often hitting lower-income households the hardest by increasing prices on essentials.
Farmers also bear the brunt. When the U.S. placed tariffs on Chinese goods in 2018, China fought back by cutting back on soybean imports. This caused American farmers to lose a major buyer, leading to a drop in soybean prices of nearly 20%. (Polansek, 2025). Many small farmers struggled to stay afloat, with some forced to sell their land or take on additional debt to survive. The U.S. government provided billions in aid to offset losses, but uncertainty in trade relations made long-term recovery difficult (Anderson, 2025).
Industries like electronics and automobiles also feel the strain. The 2018 tariffs on Chinese imports increased costs for key components like semiconductors and batteries, leading to price hikes on smartphones, laptops, and electric vehicles (Leswing, 2025). Apple, for example, warned that tariffs would raise the cost of iPhones, forcing the company to consider shifting production outside of China to mitigate the impact. Likewise, automakers like Ford and General Motors faced higher costs on steel and aluminum, leading to billions in additional expenses, layoffs, and factory closures in the U.S.
Globally, tariffs disrupt supply chains and push companies to relocate production to countries with fewer trade barriers (York, 2024). This shift can weaken domestic manufacturing and lead to job losses as companies seek cheaper alternatives abroad.
What Could Happen Next?
If tariffs continue to rise, consumers could see even steeper price increases on essentials like food, gas, and electronics. Businesses might face mounting pressure to cut jobs or relocate operations, potentially weakening the job market. Prolonged trade disputes could slow global economic growth, making it harder for developed and developing countries to recover from recent financial struggles (Cerullo, 2025).
If trade agreements are implemented or tariffs are lowered, consumer prices will stabilize, and supply chains will improve, though companies need time to adjust. However, if Trump enforces a 25% tariff on imported steel and aluminum, manufacturing costs for everyday items like soft drinks and beer will rise (Hernandez, 2025). Experts agree these costs will be passed on to consumers, increasing store prices.
Hardworking people feel the greatest impact when prices rise, as paychecks don’t stretch as far. Families make tough choices, businesses struggle, and job opportunities decrease. Tariffs often worsen the burden on those trying to get by.
Key Takeaways
- Higher tariffs on imports, such as steel, aluminum, and electronics, increase prices for everyday goods, impacting industries like automotive, technology, and agriculture.
- Retaliatory tariffs, such as China’s restrictions on U.S. soybeans, have hurt American farmers. At the same time, increased costs on raw materials have strained automakers and tech companies, leading to higher production expenses and potential job losses.
- While tariffs aim to protect domestic industries, they can disrupt supply chains, slow economic growth, and lead to trade tensions. The future depends on how businesses, consumers, and global markets respond to these policies.
Anderson, S. (2025, March 09). Trump Tariff Aid To Farmers May Again Exceed U.S. Nuclear Weapons Cost. Forbes. https://www.forbes.com/sites/stuartanderson/2025/03/09/trump-tariff-aid-to-farmers-may-again-exceed-us-nuclear-weapons-cost/
Banik, N. (2025, March 7). Tariffs harm economic growth, trade and consumers — Trump’s policy may backfire on America. The Economic Times. Retrieved March 10, 2025, from https://economictimes.indiatimes.com/opinion/et-commentary/tariffs-harm-economic-growth-trade-and-consumers-trumps-policy-may-backfire-on-america/articleshow/118792818.cms?from=mdr
Cerullo, M. (2025, March 6). Trump’s tariffs on Canada, Mexico and China are in effect. Here’s what could get pricier — and when. CBS News. Retrieved March 10, 2025, from https://www.cbsnews.com/news/trump-tariffs-what-will-cost-more-inflation/
Duggal, H., & Ali, M. (2025, February 4). Donald Trump’s trade tariffs on Canada, Mexico and China explained visually. Al Jazeera. Retrieved March 10, 2025, from https://www.aljazeera.com/news/2025/2/4/donald-trumps-trade-tariffs-on-canada-mexico-and-china-explained-visually
Grantham, W. (2025, March 8). Trump Has Begun Another Trade War. Time. Retrieved March 10, 2025, from https://time.com/7266112/trump-trade-war-timeline-of-how-we-got-here/
Hernandez, J. (2025, February 20). How Trump’s tariffs on steel and aluminum could hit you at the grocery store. NPR. Retrieved March 11, 2025, from https://www.npr.org/2025/02/20/nx-s1-5300051/tariffs-steel-aluminum-cans-food-groceries
Leswing, K. (2025, January 27). Trump tariffs could raise prices on technology like laptops, smartphones and AI. CNBC. https://www.cnbc.com/2025/01/27/trump-tariffs-could-raise-prices-on-laptops-smartphones-and-ai-.html
Polansek, T. (2025, March 4). US farmers face higher costs, fewer markets from tariffs, farm groups warn. Reuters. Retrieved March 10, 2025, from https://www.reuters.com/markets/us/us-farmers-face-higher-costs-fewer-markets-tariffs-farm-groups-warn-2025-03-04/
Wiseman, P. (2025, March 4). Here’s what tariffs are and how they work. AP News. Retrieved March 10, 2025, from https://apnews.com/article/tariffs-trump-economy-imports-inflation-62d52742c0bb0a5b8304755c6ee9af4d
York, E. (2024, June 10). Trump Tariffs: The Economic Impact of the Trump Trade War. Tax Foundation. Retrieved March 10, 2025, from https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/
Zahn, M. (2025, March 4). What to know as tariffs go into effect on Mexico, Canada, China. ABC News. Retrieved March 10, 2025, from https://abcnews.go.com/Business/tariffs-effect/story?id=119380711
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