President Trump reset U.S. trade policy on Wednesday by announcing a 10-percent general tariff on all imports to the U.S. with the exception of Canada and Mexico, along with targeted tariffs on dozens of additional countries.
The move makes good on one of the central promises of Trump’s presidential campaign and represents a course-correction in U.S. trade posture that Trump started during his first term.
Trump’s general tariff follows two months of stop-and-start tariff announcements from the new administration and contains many shades of gray, including new ways of calculating costs that have left some economists scratching their heads.
“Our country and its taxpayers have been ripped off for more than 50 years, but it’s not going to happen anymore,” Trump said during a speech in the White House Rose Garden.
Businesses and many trade groups reacted with harsh criticism, and futures markets took a dive on the announcements, which took place after markets closed.
Some labor groups and others that have consistently criticized free-trade policies as harming U.S. manufacturers and labor unions reacted positively.
Here are five takeaways from Trump’s tariff announcement.
Trump shatters a century of trade policy in one day
After months of teasing, imposing and then walking back new tariffs, Trump pitched his new import tax regime as a fundamental shift in U.S. economic and foreign policy.
Since World War II and especially over the last few decades, the U.S. has pursued free trade policies that have mostly lowered barriers to international commerce and made it easier for companies to produce and sell goods across international borders.
A major part of that agenda has been lowering tariffs and promoting international supply chains with deals and forums like the North American Free Trade Agreement, the General Agreement on Tariffs and Trade and the World Trade Organization.
Trump’s general tariff is perhaps the largest blow to that agenda since he helped to scuttle the Trans-Pacific Partnership in the run-up to his first term as president, during which he pursued a trade war that appears modest by the standards of his second term.
Massive implications for the global economy
Businesses and trade groups saw Trump’s tariff announcement as nothing short of a “game changer.”
Many looked to history books to find a precedent for the evolving U.S. trade posture, which used to congeal around a so-called Washington consensus that has been eroded over the course of the first Trump administration and the Biden administration.
“The U.S. tariff rate on all imports is now around 22 percent from 2.5 percent in 2024. That rate was last seen around 1910,” Olu Sonola, head of research on the U.S. economy at Fitch Ratings, wrote in a commentary.
Sonola said that many countries could fall into recession as a result of the tariffs, especially if they stay in place.
“This is a game changer, not only for the U.S. economy but for the global economy. Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time,” he wrote.
Trump has reversed course on multiple tariff orders during his first 100 days in office, including on 25-percent tariffs announced for Canada and Mexico and for the “de minimis exemption” for Chinese imports that would have tariffed products worth $800 or less.
The U.S. could also face serious economic blowback from the tariffs and retaliation from trading partners. Economists at Goldman Sachs expect Trump’s tariffs to boost inflation, slow the economy and raise the ...
