Trump has started, stopped, changed, or “updated” his tariffs six to ten times — depending on how you count. This whiplash tariff strategy seemed to shock many of his supporters. Odd, considering that this is exactly the same way he ran tariffs during his first presidency.
In case you’ve forgotten, Trump was President before. He introduced a lot of tariffs back then, and many of these tariffs are still in place. Before we dive into the potential impact of the 2025 tariffs, let’s examine Trump’s first attempt at a tariff system.
The old tariffs began with a focus on China. Only later did negotiation grow to encompass tariff discussions with Canada and Mexico. Which makes some sense since China + Canada + Mexico = the majority of US international trade. These tariffs were also more focused on steel, aluminum, and agriculture. What were the results?
- Steel Industry: They gained about 3,000 jobs, and wages went up.
- Employment: The numbers vary from one estimate to another. And there are a lot of variations between industries. However, it is generally agreed that the US lost 200,000 to 250,000 jobs.
- Government: It provided a temporary boost in Federal revenue, and there was increased bargaining leverage with China.
- Financial Markets: However, inflation rose, the stock market fell (losing $5 trillion), and US exports fell 10%.
- Overall: It was a financial loss for America.
There’s no reason to assume that Tariff 2.0 will be any different than Tariff 1.0. Except. This time it will be bigger, more expansive, and quite frankly meaner. Now the focus is the entire world. And Trump wants direct control of the Federal Reserve to “fix” any economic problems that result from his tariff policy. The last time Trump said this, the stock market crashed. Again.
Given the usually negative impact of tariffs, why is President Trump so interested in such an aggressive tariff policy? He’s confined that it will bring in an enormous amount of revenue. He claims that this will pay off government debts and fund massive growth in the US economy. Plus, there will be no inflation! However, this is entirely the opposite of what happened with his last tariffs. And, literally every economist IN THE WORLD has told him that tariffs ultimately damage. No serious economist has said that tariffs can save the US economy.
There are just too many twists, wrong turns, and contradictions in the tariff plan to take it at face value. There are in factors that are shaping this “Trump Tax”. To truly understand the confusion, we need to break it down piece by piece. Our next installment will tackle how tariffs are SUPPOSED to bring manufacturing back to America. And why that theory is beginning to look more like fantasy than reality.
Trump has only been President for 100 days. What do you think of his tariff policies?
Niccolls AND Dimes 