Trump correctly identifies many of the challenges the nation faces, but his proposed solutions are debatable—one of which is raising tariffs.
During his first term, President Trump imposed tariffs on roughly $370 billion worth of Chinese imports, with rates reaching up to 25%.
Despite these tariffs, the trade imbalance with China remained largely unchanged. Bloomberg just reports that "China’s trade surplus is on track to hit nearly $1 trillion in 2024, setting a record high despite ongoing global economic and political tensions."
The impact of tariffs on the U.S. economy has been mixed: on the positive side, while tariffs boosted the U.S. government revenue which was used for his tax cut, and provided leverage in trade negotiations, they also temporarily shielded some domestic industries from foreign competition, potentially leading to job growth in certain sectors.
However, the subsequent tit-for-tat escalations have made American goods more expensive abroad, decreasing demand for U.S. exports, leading to job loss in some areas. The higher prices of import goods are passed to the consumers, leading to domestic inflation. Major American industries—including agriculture, technology, and manufacturing—lost market share and trade partners, and saw declining revenues.
Export-dependent industries and their supply chains were hit especially hard, facing increased risks of job losses.
Retaliatory tariffs disrupted international supply networks, raising costs for companies that depend on imported parts and materials. This impact was felt not only by American consumers and businesses but also by global corporations with operations in the U.S., as many rely on cross-border production networks.
Moreover, the unpredictability of ongoing trade conflicts has created a climate of uncertainty, leading companies to delay investments and expansion plans.
Finally, countries affected by U.S. tariffs have increasingly sought new trade partners, forming alliances that bypass the U.S. market. This shift could weaken America’s long-term trade relationships and business opportunities, making America isolated in the global trend for cooperation, especially if other nations come to view the U.S. as an unreliable or unpredictable partner.
According to analyses by the Carnegie Endowment for International Peace and the Council on Foreign Relations, the overall effects of these tariffs remain complex. In reality, U.S. businesses have faced increased costs and market disruptions, which have contributed to inflationary pressures and raised questions about the long-term effectiveness and cost of using tariffs as a trade policy tool.
A Chinese saying goes, "杀敌一千，自损八百" (shā dí yī qiān, zì sǔn bā bǎi), which means, "You kill one thousand enemy troops, but at the cost of losing 800 yourself." This expression captures the heavy cost of inflicting harm on another.
While Trump 1.0 tariffs aimed to weaken China’s economic position, they ultimately backfired, creating comparable setbacks for American businesses and consumers, and harming U.S. interests in the long run.