Elena Senftner

A tariff is a tax on imported products.[1] If a tariff is placed on imported goods, the importing country must pay the United States (“U.S”) Customs and Border Protection to bring the foreign product into the U.S..[2] In practice, this means importing goods into the U.S will generally cost more. For example, if a buyer imports a product without a tariff, they would only need to pay for the product and shipping fees.[3] However, if a buyer imports a product with a tariff, they must pay for the product, shipping fees, and the tariff itself. [4]The increased cost of importing is likely to be passed on to customers as foreign importers experience higher costs. Consequently, foreign importers may look to buy goods locally instead.[5]

However, the option for U.S. foreign importers to look internally for products is quite limited. The U.S. relies on foreign exports for most of the products sold within the country.[6] In 1934, the U.S. began the process of opening world markets and expanding trade, which played an important role in American prosperity.[7] Since the post-1950 period, the U.S. economy has transitioned from a manufacturing economy to a service economy dominated by highly skilled workers. [8] By the 2000s, nearly 80 percent of the American workforce was in the service sector.[9] From 1970 to the present, U.S. manufacturing jobs have steadily decreased, with countries like China filling the manufacturing void by producing goods at a cheaper rate.[10] As it stands, the U.S. relies on global markets for goods and raw material procurement.[11] The U.S.’s major global trading partners include Canada, Mexico, China, Japan, the United Kingdom, Germany, South Korea, Brazil, India, and Taiwan.[12] Notably, Canada, Mexico, and the United States have engaged in robust trade agreements for decades.[13]According to the Peterson Institute for International Economics, the move toward a service-based economy has increased American incomes by nine percent due to the expansion of global trade.[14]

The Obama administration worked to open and maintain global trade relations.[15] The administration prioritized increasing global trade by negotiating agreements and strengthening ties with foreign nations.[16] Citing empirical research, the administration focused on decreasing tariffs between nations with which the United States trades to promote global trade.[17] The main goal was to keep the U.S. economy open to other countries while giving businesses economic momentum to grow and create jobs, which, in theory, would help expand the middle class in the United States.[18]

Conversely, when President Trump took office, his rhetoric and approach were much less concerned with relationships and connections between countries.[19] From 2016 to 2020, President Trump’s administration adopted a more isolationist stance, with the stated goal of putting “America First.” President Trump imposed strict economic sanctions on foreign nations and withdrew from several Obama-era negotiated deals, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.[20] President Trump also took a strong stance against China. For instance 2018, President Trump placed a 25% tariff on roughly $50 billion in Chinese goods.[21] He also criticized the North American Free Trade Agreement (NAFTA) between the U.S., Canada, and Mexico, arguing that it unfairly disadvantaged Americans.[22] President Trump renegotiated NAFTA, resulting in the United States-Mexico-Canada Agreement (USMCA), which aimed to create a more balanced trade approach.[23]

The Biden administration reprioritized relationships with South Korea and Japan after Trump’s first term.[24] The administration paused steel and aluminum tariffs placed on the European Union and instead opted for an EU quota system. Biden also chose to keep Trump’s USMCA but emphasized the importance of close ties with the United States’ neighbors to the north and south.[25] Notably, the Biden administration retained the tariffs President Trump imposed on China and even increased them, citing that they helped reduce China’s corrupt trade practices.[26]

President Trump’s second term poses a much harsher threat to nearly all foreign exporters of goods to the U.S. Before his inauguration, President Trump stated that he planned to impose 10-20 percent tariffs on all nations.[27] On the campaign trail, he addressed trade between the U.S. and EU member states, saying, “They don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States. No, no, no, they will have to pay a big price.”[28]As of now, a few months into his term, President Trump has not officially placed tariffs on any U.S. imports from the EU. However, he told reporters that he plans to impose a 25% tariff on goods made in the EU.[29] This trade aggression against the EU, combined with President Trump’s de-prioritization of defending Ukraine against Russia’s invasion, could significantly disrupt the nearly $1 trillion traded annually between the U.S. and the EU.[30]

Seemingly dismantling the long-standing trade agreement with the United States’ oldest and most reliable ally, Trump has also imposed a 25% tariff on Canadian exports, citing border issues and fentanyl distribution into the U.S.[31] These claims lack merit. According to U.S. Customs and Border Protection, less than 1% of all fentanyl seized in the U.S. comes from Canada.[32] Furthermore, Canada has responded to President Trump’s request for stricter border control; on December 17, 2024, Canada announced a $1.3 billion investment plan to bolster its border security.[33] The Canadian government highlighted how devastating this tariff would be economically.[34] Canada is the top customer of U.S. goods and services, and every day, over $2.5 billion worth of goods and services cross the border.[35]Additionally, Canada is the only U.S. trade partner with which the U.S. has a trade surplus.[36] In response to President Trump’s tariffs, Canada has announced retaliatory tariffs against U.S. goods. Canadian Foreign Minister Mélanie Joly stated:

Today, the United States has chosen to pursue a harmful course of action that threatens the prosperity of both our nations. Canada stands firm in defending our economy, workers, and businesses against these unjustified tariffs. We are announcing a robust response of $155 billion and remain prepared to take additional measures as needed.[37]

In addition to imposing tariffs on Canada, President Trump has placed 25% tariffs on Mexico, citing similar concerns regarding fentanyl and immigration. [38] Like Canada, this will significantly impact both the Mexican and American economies.[39] American automobile prices will rise, millions of jobs will be negatively affected, and inflation will increase. [40] All of this negatively impacts American consumers and citizens.[41] By and large, Americans have benefited from the free trade flow between the U.S. and Mexico. Mexico is one of the U.S.’s “most valued partners, with a 2,000-mile shared border containing 47 active land ports of entry and a shared history of deep cultural and economic ties spanning over 200 years of diplomatic relations.”[42] Mexico has responded to these tariffs with retaliatory measures, increasing costs for American businesses and consumers.[43]

In a White House paper written by President Trump’s executive team, there is little data or explanation as to how these tariffs will lower immigration or decrease fentanyl-related deaths.[44] This paper does not address President Trump’s current plans for tariffs against China, which is a separate and complex issue. However, as it stands, President Trump’s tariffs threaten to upend decades of economic growth, strain U.S. alliances, and drive-up costs for American consumers. His aggressive trade war with key partners like Canada, Mexico, and the EU risks job losses, inflation, and economic instability—all without clear benefits. While past administrations prioritized trade to strengthen the economy, President Trump’s policies prioritize isolation and disruption, leaving American businesses and workers to bear the consequences.

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[1] June Kim, How Tariffs Work, N.Y. Times (Feb. 12, 2025) https://www.nytimes.com/interactive/2025/business/economy/what-are-tariffs.html.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] See Top Trading Partners – January 2017, U.S. Census Bureau, https://www.census.gov/foreign-trade/statistics/highlights/toppartners.html.

[7] Office of the United States Trade Representative, Economy and Trade, https://ustr.gov/issue-areas/economy-trade#:~:text=America%20is%20the%20world%27s%20largest,the%20development%20of%20American%20prosperity.

[8] Francisco J. Bureau & Joseph P. Kabuki, The Rise of the Service Economy, 102 Am. Econ. Rev. 2540, 2540 (2012).

[9] Id.

[10] Ruth Strachan & Sebastian Shegadi, Who killed U.S.? Investment Monitor (May 21, 2021), https://www.investmentmonitor.ai/manufacturing/who-killed-us-manufacturing/?cf-view.

[11] The Economic Benefits of U.S. Trade, May 2015, https://obamawhitehouse.archives.gov/sites/default/files/docs/cea_trade_report_final_non-embargoed_v2.pdf

[12] Alan Kronenberg & Jaclyn Jeffery-Wiensky, As Tariff Loom, Which Countries Are America’s Biggest Trade Partners, U.S. News, (December 3, 2024) https://www.usnews.com/news/best-countries/articles/which-countries-are-the-biggest-u-s-trade-partners.

[13] See North American Free Trade Agreement (NAFTA) and U.S.-Mexico-Canada Agreement (USMCA).

 

[14] Office of the United States Trade Representative, supra note 8.

[15] The Economic Benefits of U.S. Trade, Executive Office of the President of the United States, (May, 2015) https://obamawhitehouse.archives.gov/sites/default/files/docs/cea_trade_report_final_non-embargoed_v2.pdf.

[16] Id.

[17] Id.

[18] Id.

[19] Samantha Carl-Yoder et al., A First Look at the Second Trump Administration’s National Security and Foreign Policy, Brownstein Client Alert, (Jan. 8, 2025) https://www.bhfs.com/insights/alerts-articles/2025/a-first-look-at-the-second-trump-administration-s-national-security-and-foreign-policy.

[20] Id.

[21] Pamela Brown and Julia Horowitz, Trump Announces Tariff on $50 Billion Worth of Chinese Goods, CNN (June 15, 2018.) https://money.cnn.com/2018/06/14/news/economy/trump-china-tariffs/index.html.

[22] United States-Mexico-Canada Agreement, Office of the United States Trade Representative, https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement.

[23] Id.

[24] Cong. Rsch. Serv., U.S.-South Korea (KORUS) FTA and Bilateral Trade Relations (IF10733), Prepared by Liana Wong and Mark E. Manyin,  https://sgp.fas.org/crs/row/IF10733.pdf (Nov. 14, 2024); Cong. Rsch. Serv., U.S.-Japan Trade Agreements and Negotiations (IF11120), Prepared by Cathleen D. Cimino-Isaacs and Kyla H. Kitamura, https://crsreports.congress.gov/product/pdf/IF/IF11120 (April 3, 2024).

[25] See Teri Schultz et al., How Europe is bracing for Trump’s second term as threat of tariffs loom, NPR (Dec. 1, 2024) https://www.npr.org/2024/12/01/nx-s1-5207944/how-europe-is-bracing-for-trumps-second-term-as-threat-of-tariffs-looms; see also Joshua P. Mektzer, The Importance of USMCA for the Biden administration’s economic and foreign policy, Brookings (Apr. 28, 2021) https://www.brookings.edu/articles/the-importance-of-usmca-for-the-biden-administrations-economic-and-foreign-policy/.

[26] Ana Swanson & Jordyn Holman, Biden Administration Rachets Up Tariffs on Chinese Goods, N.Y. Times, (Sept. 13, 2024) https://www.nytimes.com/2024/09/13/us/politics/biden-tariffs-chinese-goods-clothing.html.

[27] Ryan Ermey, Trump’s tariff plan: why he’s pushing for them, and how they might end up raising prices, (Nov. 7, 2024) https://www.nbcnewyork.com/news/business/money-report/trumps-tariff-plan-why-hes-pushing-for-them-and-how-they-might-end-up-raising-prices/5963832/.

[28] See Teri Schultz et al, supra note at 25.

[29] Michelle Fleury & Natalie Sherman, Trumps say 25% tariff on EU will be announced soon, B.B.C. (Feb. 27, 2025), https://www.bbc.com/news/articles/c05ml3q2gn7o.

[30] European Union, Office of the United States Trade Representative, (last visited March 7, 2024) https://ustr.gov/countries-regions/europe-middle-east/europe/european-union#:~:text=U.S.%20total%20goods%20trade%20with,(%242.6%20billion)%20from%202023.

[31] Fact Sheet: President Donald J. Trump Imposes Tariff on Imports from Canada, Mexico and China, Feb.1,  2025, https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/.

[32] Canada announces robust tariff package in response to unjustified U.S. tariffs. Department of Finance Canada. (2025, March) https://www.canada.ca/en/department-finance/news/2025/03/canada-announces-robust-tariff-package-in-response-to-unjustified-us-t.

[33] Id.

[34] Id.

[35]  id.

[36] Id.

[37] Id.

[38] Fact Sheet: President Donald J. Trump Imposes Tariff on Imports from Canada, Mexico, and China, supra note 32.

[39] Josha P. Meltzer, Trump’s 25% tariff on Canada and Mexico will be a blow to all 3 economics, Brookings, Feb. 3, 2025, https://www.brookings.edu/articles/trumps-25-tariffs-on-canada-and-mexico-will-be-a-blow-to-all-3-economies/#:~:text=The%20U.S.%20tariff%20of%2025,harms%20across%20the%20three%20countries.

[40] Id.

[41] Id.

[42] U.S. Department of State, U.S. Relations with Mexico, Jan. 20, 2025, https://www.state.gov/u-s-relations-with-mexico/#:~:text=U.S.%2DMEXICO%20RELATIONS,200%20years%20of%20diplomatic%20relations.

[43] Farah Najjar, ‘Cool head’: How Mexico’s Claudia Sheinbaum got Trump to halt some tariffs, Mar. 6, 2025, https://www.aljazeera.com/news/2025/3/6/cool-head-how-mexicos-claudia-sheinbaum-is-handling-trump-and-tariffs.

[44] Fact Sheet: President Donald J. Trump Imposes Tariff on Imports from Canada, Mexico and China, supra note 32.