Throughout his 2024 election campaign, President Donald Trump mentioned the imposition of tariffs on all friends and foes. In his election speech, he said that he loved the word “tariff” the most. Later, after he assumed the Oval Office, the newest President of the US announced tariffs on Canada, Mexico, and China.
Tariffs imposed on Canada and Mexico were lifted after negotiations and paused for 30 days. Just three days ago, President Trump announced a list of tariffs on all US trade partners and declared the day “Liberation Day.”
Initially, President Trump declared a reciprocal policy regarding tariffs. Later, on 2nd April 2025, he announced high tariffs on approximately 90 nations of the world, but not on reciprocity, and was of the opinion that these tariffs are a kind of version, putting a very light hand on these states. According to President Trump, the US economy has become sick and it needs treatment via tariffs as medicine. However, apparently, the situation is seemingly going against the US itself. The affected countries are hitting back at the US on a reciprocity basis. The medicines (tariffs) are going to be detrimental to the US itself. This executive order, signed by the US, has disturbed the already set global norms, and global trade is on the path to downfall.
Historical Perspective of Trade Barriers and Tariffs
The tariff war imposed by Trump is not new. Instead, post-civil war American history is dominated by such isolationist policies.
- President McKinley (1897-1901)
Initiating a wave of industrialization, President McKinley signed an executive order named the “Dingley Tariff” in 1897. This act introduced a 52% tariff on all US imports. The goal was to revive American industrial eminence and to bring about a federal revenue that resonated with the US national interest. According to some reports, the act resulted in a complete boost in the US manufacturing sector, bypassing key steel and coal production of various states, including Britain and France. The downsides of this act included tariff imposition by other states on the US on a reciprocity basis, high domestic prices of commodities in the US, and constant strain on the working class.
- President Herbert Hoover (1929-1933)
During the Great Depression period, President Hoover signed the “Smoot-Hawley Tariff Act” of 1930. This act imposed approximately 60% tariffs on a long list of US imports. The goal was again to boost federal revenue, reduce the trade imbalances between the US and the rest of the world, and enhance the domestic manufacturing and services sector of the US. The order resulted in the rise of the US industrial sector, and many states, out of fear, started buying more US commodities. The drawbacks of this act included reciprocal tariffs by other states on the US, boycott of the US goods by the world nations, and the downfall of the global trade up to 60%.
Key Features of the Liberation Executive Order (2025)
This executive order implemented a 10% baseline tariff on all US imports universally. Due to heightened trade imbalances, Trump announced additional tariffs on 60 countries, which will be above 10%. These include China (34%), the EU (20%), Japan (24%), India (27%), Israel (17%), Pakistan (30%), South Africa (31%), South Korea (26%), and Taiwan (32%). These tariffs will be imposed on 9th April 2025.
President Trump has also announced a 25% tariff on the import of foreign automobiles. The administration exempted Russia, North Korea, and Iran from tariff impositions as these states are already under harsh sanctions and economic pressures by the US. Trump has also imposed more than 10% tariffs on uninhabited islands of Australia, i.e., Norfolk Island. Similarly, all strategic goods like pharmaceuticals, copper, semiconductors, and gold are exempted from further imposition of tariffs.
Imminent Impacts of the “Trump Tariffs” War
The global tariffs imposed by President Trump have seriously hit back at the US economy in just the past 3 days. According to reliable reports, some 2.4 trillion dollars have been lost by American investors in just one day after the imposition of tariffs. The director of the IMF, Kristalina Georgieva, has warned the US not to escalate the trade war, which is posing serious risks to the global economy. Not only this, but world nations are also reacting harshly, one by one, to Trump’s hawkish policies. Canada has imposed approximately a 25% tariff on vehicles imported from the US.
President Trump has once again revived a major trade war with China, imposing approximately 34% tariffs on Chinese goods. China, in response, has also imposed a reciprocal (34%) tariff on all American goods. Similarly, European counterparts have also hit back at the US. A ‘domestic goods’ scheme has been started in the European nations. Customers have boycotted US goods, and the sellers are now forced to provide domestic commodities to the consumers. French President Macron has devised a plan to halt all French investments in the US immediately. Countries including India, South Korea, Mexico, Argentina, and Japan are still trying to negotiate with the US to reduce the tensions. The US giant tech companies have observed a total of $1 trillion in losses.
Similarly, the airline sector has also been hit by the global trade war initiated by the US. United Airlines, Delta Airlines, and Frontier Airlines have observed losses of 16%, 11%, and 12%, respectively. These airlines are being impacted because the US has imposed high duties on oil or diesel imports used in jets and planes. Another major impact of these tariffs is that the majority of US companies and brands are now trying to invest in Russia, a country that is under immense sanctions and economic pressures from the US. American investors and brand owners are now vying for the lifting of these sanctions from Russia.
The US, which has always tried to isolate Russia, is now providing room for Russia’s socialization and global linkage. The countries being targeted by the US are now engaging with Russia and China to promote more resilient and free trade throughout the world and counter the American shots.
Implications for the US
The tariffs’ imposition and initiation of the trade war are easy to order and implement, but very hard to win. Unilateral imposition of high-duty tariffs will unite the whole world against the US. These tariffs are then going to impair the US domestic workers and peasants. Trump’s protectionist policies will definitely destabilize the global markets, not only affecting the core nations but also impacting third-world countries that are already striving to develop their economies. Similarly, such unilateral, strident economic policies will further motivate the US adversaries and geopolitical rivals to gather maximum support from the rest of the world against the US. Last but not least, this trade war is causing a serious dent in global supply chains, which are already under tension due to various conflicts in Europe and the Middle East.
Result of the Reciprocal Tariffs
No doubt, the US is facing serious trade imbalances with its partners going into surplus over the US. This has to be fixed. However, the Trump administration must also acknowledge that the introduction of severe trade policies will negatively affect the whole world. It will give rise to negative economic peace in America, but the long-term consequences will be even harder than ever. In conclusion, the US needs to adopt a much smarter approach to dealing with domestic vulnerabilities and, with negotiations and diplomatic help, form allies to remove disparities and imbalances between the US and the rest of the world.
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The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.
He is pursuing a BS in International Relations programme from International Islamic University, Islamabad and has a keen interest in research works, policy analysis, defence and strategic studies and conflict resolution.