Tariffs: The Impetus and Aftermath
Tariffs are “A tax on imported goods,” according to American economist Gregory Mankiw. These taxes aren’t a modern phenomenon – in fact, they have been part of the world’s economic milieu since the existence of commerce. According to Shapiro, ancient tariffs were “a straightforward fixed fee to be paid before foreign goods could jingle their way into city markets.”
Trump’s Argument
In a globalized economy, the back-and-forth goes largely unnoticed. However, the rhetoric hasn’t been the same since President Donald Trump took office.
Despite his polarizing personality, Trump has been consistent apropos tariffs since his days as an outspoken, 30-something real estate developer. During his appearances on Larry King and Oprah Winfrey, Trump repeatedly noted how countries like Japan and China were “ripping us off.” To offset this purported imbalance, Trump suggested renegade measures such as instituting “relative and/or retaliatory tariffs.” In 2016, Trump campaigned on “re-establishing” the American hegemony. After winning the presidency, he was swift to call out and quell trade agreements such as NAFTA and TPP.
Tariffs aren’t entirely a single partisan issue either. Alex Thompson made a case in Axios last month elucidating “Why some Democrats are warm to Trump’s tariffs.” Thompson argued that tariffs are a necessary evil and noted how Democratic party bigwigs are carefully treading the line, lest they alienate their voters.
In February, Trump signed an executive order imposing tariffs on Mexico, Canada and China during the administration’s nascent days. The order decreed, tariffs hold countries “accountable.” Demanding they “halt illegal immigration and stop poisonous fentanyl and other drugs from flowing into our country.”
On April 2, 2025, President Trump announced a “universal, ten percent tariff on all imported goods.” During the unprecedented event held at the Rose Garden, Trump declared “retaliatory tariffs against 90 countries.” The rationale was straightforward. With tariffs, countries pay their fair share and corporations make in America, instead of overt outsourcing.
Wall Street Spooked
While many on the right lauded Trump’s decisive action, markets didn’t feel the same. In an astounding collapse, $2.4 trillion off from the stock market in a single day. Markets worldwide began to crash, and losses continued to pile-up. Recession fears augmented, as investor Bill Ackman (like many others), called for a “90-day pause” in his X post.
Following the global panic, Trump administration momentarily decried the “pause,” before cooler heads prevailed. On April 9, a week after “Liberation Day,” Trump changed course. The White House announced a 90-day pause for most tariffs, with the exception of China, where a further 125% tariff was set forth.
With unrelenting tariffs levied on China, certain things will get expensive. According to The New York Times, “China is a major source of imported consumer electronics in the United States: 73 percent of smartphones, 78 percent of laptops and 87 percent of video game consoles. China also exports 77 percent of the toys coming into the United States. Low-cost clothing could also get more expensive.” The Hollywood Reporter outlined the impact of tariffs on the film industry. “China is set to reduce the number of Hollywood films it imports in response to an escalating tariff war with the U.S. and will look to increase film imports from other countries.”
Whether this gigantomachy between two superpowers escalates to a full-fledged trade war or if a mutually conducive deal eventually pans out, needs to be seen.
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