Tariffs increase the price of imported goods, which can shield domestic producers from foreign competition. This protection may preserve or create jobs in industries like steel or manufacturing, as seen during Trump’s first term when 2018 tariffs on steel added some jobs to the sector. However, higher input costs for industries reliant on imported materials—like automotive or construction—often lead to reduced competitiveness, job cuts, or price hikes passed onto consumers. The Penn Wharton Budget Model projects that Trump’s 2025 tariffs, including a 10% universal tariff and up to 145% on Chinese goods, could reduce U.S. GDP by 8% and wages by 7%, with a middle-income household facing a $58,000 lifetime loss. These figures highlight tariffs’ broader economic drag, as they disrupt supply chains and raise costs across industries.

Consumers bear much of the burden. Tariffs act as a regressive tax, hitting lower-income households hardest by increasing prices for essentials like food, clothing, and electronics. The Tax Foundation estimates Trump’s tariffs will cost U.S. households an average of $1,300 annually in 2025, with proposed 25% tariffs on Canada and Mexico potentially adding $3,000 to car prices and raising grocery costs due to Mexico’s role as a key produce supplier. Retaliatory tariffs from trading partners, such as China’s 125% duties on U.S. goods, further harm exporters, particularly farmers, and risk escalating into a global trade war, as seen in market plunges wiping out $10 trillion in global equity value in April 2025.

Trump’s 2025 tariff strategy, invoking emergency powers under the International Emergency Economic Powers Act, targets trade deficits and issues like fentanyl trafficking and migration. A 10% baseline tariff on all imports, with higher rates for countries like China (54%), the EU (20%), and India (26%), aims to force reciprocal trade terms. Supporters argue these measures will revive U.S. manufacturing and leverage trade negotiations, citing Trump’s “Art of the Deal” approach. Yet, critics, including economists and GOP megadonors like Ken Langone, warn of recession risks, with J.P. Morgan estimating a 60% chance of global downturn by year-end. The IMF has slashed U.S. growth forecasts to 1.8% for 2025, down from 2.7%, underscoring the tariffs’ chilling effect.