Trump Tariffs Will Raise Prices, Crash Economy, Won’t Bring Back Manufacturing
Critics warn new tariffs could trigger a recession, raise consumer costs and shift the tax burden further onto working-class Americans to benefit the ultra-rich.
WASHINGTON, D.C. — The Trump administration’s new reciprocal tariff policy — which imposes a 10% baseline tariff on all imports from foreign countries, plus additional higher tariffs on countries with significant trade deficits with the United States — is prompting warnings that the policy could crash the economy, spike consumer prices and act as a regressive tax that disproportionately burdens working-class Americans.
Under the new order, the United States will impose a 34% tariff on imports from China. This is in addition to a previously imposed 20% tariff, bringing the total tariff on Chinese goods to 54%. The order also levies a 46% tariff on Vietnam, 20% on the European Union, 32% on Taiwan and 24% on Japan. The full tariff list can be found here.
Analysts warn that companies which have previously relocated production from China to Vietnam or Mexico — often at the urging of the U.S. government — will now face additional penalties, as tariffs on nearly every country have been increased.
In addition to the tariffs, Trump signed an executive order closing the de minimis exemption for China. This means packages shipped from China valued at $800 or less — which previously entered the U.S. duty-free with minimal customs processing — will now be subject to the full 54% tariff.
With more Americans relying on China-based platforms such as Shein, Temu and AliExpress, as well as Amazon, the volume of de minimis shipments has increased. In 2023, more than 1 billion packages entered the United States under the de minimis threshold — the majority originating from China. With the exemption eliminated, analysts expect prices on these platforms to rise significantly.
While the United States’ largest trading partners, Canada and Mexico, were excluded from the list of countries on the reciprocal tariff chart released April 2, they are still impacted by the tariffs Trump implemented in February that were intended to curb fentanyl trafficking into the U.S. These include 25% tariffs on non-USMCA-compliant goods and a 10% tariff on Canadian energy products.
Russia was also excluded from the list, as trade between the U.S. and Russia has already been largely halted due to sanctions related to the war in Ukraine.
The tariffs on goods from Canada and Mexico mark the U.S.’s first significant departure from the free trade agreements of the 1990’s that have kept tariff rates close to zero for decades. According to the World Trade Organization, Canada charges the U.S. an average tariff of 0.8%, and Mexico charges 4.4% under the United States-Mexico-Canada Agreement (USMCA).
The U.S. has also signed free trade agreements with South Korea that hold average tariff rates between 0% and 5.3%. However, that did not stop Trump from imposing a 25% tariff on South Korea while falsely claiming it imposes a 50% tariff on U.S. goods.
Misleading Tariff Claims
Charts released by the White House claim that China charges the U.S. a 67% tariff, Vietnam 90%, Taiwan 64%, Japan 46% and the EU 39%. However, these are not actual tariff rates.
According to WTO data actual tariff rates are much lower. The average tariff rate countries charge the U.S. typically ranges between 4% and 6%. China charges an average applied tariff of about 7.5% on U.S. goods, Japan charges around 2.5%, the EU between 3% and 4%, and Vietnam charges approximately 9.5%. India, one of the countries that charges the U.S. the highest rates, has a tariff of 17%.
Before Trump’s new tariffs, the average applied U.S. tariff was around 2.3%, which isn’t far from the global average. However, that figure has now surged to approximately 22.5% — the highest level since 1909.
The inflated “tariff rates” cited by the Trump administration were not derived from actual customs duties. Instead, the administration calculated them by dividing the U.S. trade deficit in goods with each country by the value of imports from that country.
For example, the U.S. had a $17.9 billion goods trade deficit with Indonesia in 2024 and imported $28 billion worth of goods. Dividing the deficit by the import value yields 64% — a figure the White House incorrectly labels as Indonesia’s “tariff” on U.S. goods.
A trade deficit is not a tariff. It merely reflects that the U.S. bought more goods from a country than it sold. The administration’s calculations also ignore trade surpluses in services, which the U.S. maintains with most countries.
Economic, Political Consequences
Trump has framed the tariffs as a way to increase federal revenue and revive domestic manufacturing. Critics, however, argue that blanket tariffs are unlikely to spur re-industrialization and will instead raise the cost of basic goods.
“If the U.S. truly wants to re-industrialize, it needs a real industrial policy: a clear plan for state-led development, involving heavy government investment in infrastructure, education, training and industrial upgrading,” said Ben Norton, an independent journalist and author of the Geopolitical Economy Report. “Trump is not doing any of that — on the contrary, he is combining Reaganomics with blanket tariffs.”
Norton said targeted tariffs in industries like electric vehicles or semiconductors could help bolster U.S. manufacturing competitiveness. But across-the-board tariffs are more likely to function as a regressive consumption tax.
“What is really happening is Trump is just using tariffs as a tax on consumers, to shift the tax burden even more off of wealthy elites and onto the poor,” Norton said. “He is slashing taxes on the rich and corporations and imposing a heavy consumption tax on the poor and working class. Trump himself said the goal with these tariffs is to raise more government revenue.”
Norton added that the policy could trigger a recession, which “now looks increasingly likely.”
Financial analysts appear to agree. JPMorgan recently raised its estimate of a U.S. recession in 2025 to 60%, citing Trump’s tariff strategy. The stock market responded with sharp declines, with the S&P 500 losing roughly $5 trillion in market value over two days.
Additionally, instead of tariffs causing the prices of foreign made goods to increase past the prices of those that are manufactured domestically, analysts have warned that prices will increase across the board.
According to James Surowiecki, staff writer at The Atlantic, “When the price of foreign goods soars due to tariffs, it's utterly absurd to think that domestic producers are not going to raise prices to take advantage of the fact that their competitors are suddenly much more expensive.” Surowiecki is also skeptical of the idea that tariffs will cause a meaningful manufacturing boom, saying, “[Even] if factories come back to the U.S., they will be highly automated and will create relatively few good-paying jobs.”
Tariffs as Political Leverage
The new tariffs also give Trump political leverage by allowing him to control which countries and corporations are granted exemptions.
“Now every country and every company will have to come hat in hand to Trump, to plead their case to the king and get their little carveout or exemption — and he can get whatever he wants from them,” said Krystal Ball, co-anchor of Breaking Points. “He can also threaten these exemptions to punish anyone who would dissent or support his political adversaries.”
Anti-trust lawyer Basel Musharbash responded to the tariffs saying, “This is not the tariff strategy you pursue if you actually want to build up domestic industry. This is the tariff strategy you pursue if you want to dangle exceptions in front of importers and shake them down for donations and favors.”
While Trump hopes to consolidate power through the tariff regime, history suggests the approach may carry political risks.
“When [President William] McKinley famously put tariffs on in 1890, they lost 50% of their seats in the next election,” Sen. Rand Paul, R-Ky., told Fox News. “When [Sen. Reed] Smoot and [Rep. Willis] Hawley passed their tariff in the early 1930s, we lost the House and Senate for 60 years. They’re not only bad economically, they’re bad politically.”
Tariffs Are Backlash to Free Trade
Trump’s tariff surge reflects a long-simmering populist backlash to free trade agreements such as the North American Free Trade Agreement (NAFTA) which led to decades of American manufacturing jobs being outsourced to countries with cheaper labor. Unions including the United Auto Workers have historically supported targeted tariffs in sectors such as automotive manufacturing to prevent offshoring and incentivize domestic production.
As a result there is bipartisan support for tariffs to be used in the right way to revitalize American manufacturing jobs that helped working class Americans make a living for decades. While Trump ran for President talking about how Americans have been ripped off by bad trade deals — so did many Democrats. However, Democrats that support tariffs have a better understanding of how to use them to revitalize manufacturing.
Congressman Josh Riley (D-NY-19) responded to Trump’s tariffs saying, “Bad trade deals have gutted the American middle class, American manufacturing, and American national security, all so big corporations and Wall Street banks could make an extra buck. We need strategic tariffs targeted at bad actors and critical industries, ambitious domestic investments like the CHIPS & Science Act, strong labor unions, and real penalties for price gouging.” Riley continued, “If the Trump Administration was serious about putting American workers first, they'd do that instead of busting unions, killing manufacturing investments, and letting corporations use tariffs as an excuse for price gouging.”
Congressman Chris Deluzio (D-PA-17) added, “I support using tariffs as a tool against bad actors and trade cheats like Communist China. I support using tariffs strategically alongside muscular industrial and pro-worker policies to protect American jobs and consumers. I do not support the decades-long Washington consensus on free trade that has crushed American industry and jobs and given us far-flung supply chains that too often fail.”
According to Deluzio, “[We] need more than just tariffs to rebalance trade and kickstart American manufacturing. And we should not treat close economic allies like Canada the same as mercantilist trade cheats like China.” He added, “American workers and consumers should not be the ones paying for the necessary transition away from a broken trade system; the businesses that profiteered from that old regime should bear the cost.”