Donald Trump on Tariff Policy
Donald Trump views tariffs as a central element of his "America First" trade policy, asserting they are necessary to promote domestic manufacturing and protect national security, as well as potentially substitute for federal income taxes. Throughout his political career, Donald Trump has professed a strong affinity for tariffs, even calling the word "the most beautiful word in the dictionary".
During his first term, Trump initiated a trade war, most notably with China, and imposed tariffs on products like steel and aluminum. In his second term, his administration enacted a series of steep tariffs affecting nearly all imported goods, raising the overall effective US tariff rate to the highest level since 1935. He has claimed that foreign countries pay the tariffs, but economists counter that US importers and consumers ultimately bear the cost through higher prices.
Trump has taken an increasingly aggressive stance on tariffs, using executive authority under laws like the International Emergency Economic Powers Act (IEEPA) to impose universal and reciprocal tariffs. These actions have involved threatening allies and trading partners like members of the European Union (EU) with punitive rates, often in pursuit of non-trade related goals such as the acquisition of Greenland. The scope and scale of the tariffs enacted in his second term have been far greater than those imposed during his first presidency.
Context
Donald Trump's focus on tariffs is rooted in his broader "America First" economic philosophy, which prioritizes economic security as synonymous with national security. He believes these trade barriers are essential tools to counteract what he perceives as unfair trade practices by other nations, which he claims result in detrimental US trade deficits.
His approach often involves using the threat of tariffs to force trading partners to the negotiating table to achieve trade deals or political concessions, as seen with threats against Canada, Mexico, and EU nations. The significant use of executive authority, such as under the IEEPA, to enact these measures represents an expansion of presidential influence over commerce and has led to substantial legal challenges.
Actions Taken
- Trade Policy ImplementationAnnounced a 10% universal tariff on imports from all countries, taking effect on April 5, 2025, under the authority of the IEEPA.
- Trade Barrier ImpositionImposed 25% tariffs on steel and aluminum products, using Section 232 of the Trade Expansion Act of 1962.
- Trade War InitiationInitiated a trade war with China by setting and escalating tariffs on goods imported from the country during his first term.
- Product Specific TariffsImposed tariffs on solar panels (30-50%) and washing machines (30-50%).
- Material TariffsImposed 25% tariffs on steel and 10% on aluminum from most countries, later extended to the EU, Canada, and Mexico.
Key Quotes
Tariff is the most beautiful word in the dictionary.
This Tariff will be due and payable until such time as a Deal is reached for the Complete and Total purchase of Greenland.
Criticism
Many economists criticize the administration's stance that foreign countries pay the tariffs, arguing that US importers pay the fees, which are then largely passed on to US consumers through higher prices.
The IMF and others have repeatedly warned that the uncertainty generated by the frequent tariff threats is as damaging to the economy as the tariffs themselves, suggesting 'uncertainty is the new normal' in the Trump era.
Kallas stated that the tariff threats risk making Europe and the United States poorer and undermine shared prosperity, suggesting such actions benefit rivals like China and Russia by creating divisions among Allies.
Sources7
Tariffs in the second Trump administration - Wikipedia
* This is not an exhaustive list of sources.