On Wednesday, April 2, President Donald Trump announced new “liberation day” tariffs. This was something that he had promised during his campaign; however, the magnitude of the tariffs and the careless way in which they were calculated and enacted was shocking. Trump enacted a 10% tariff on all imports, as well as higher “reciprocal” tariffs on countries that supposedly were “ripping off” the U.S. This included a 34% tariff on imports from China and a 46% tariff on imports from Vietnam. Tariffs on Chinese goods were later raised to 145% after China imposed their own retaliatory tariffs on U.S. goods. President Trump seemed to realize that this was bad policy and announced a 90-day pause on all tariffs except China. However, a pause is not good enough; in order to avoid a recession and higher inflation, the tariffs must be repealed entirely.
To explain why tariffs are a bad idea, I should start by explaining how tariffs work. A tariff is a tax on imported goods. When a company imports a good, that company is the one that pays the tariff. Again, it is American companies, not foreign countries, that pay tariffs. When tariffs are enacted, importers have three choices. They can attempt to negotiate a lower price with their foreign suppliers, absorb the costs of tariffs by reducing their own profit margins or pass the increased costs to consumers through higher prices. Foreign suppliers of most products are unwilling to lower prices because they have other trading partners not subjected to tariffs. Corporations exist to make money; they almost never willingly reduce their own profits. That leaves consumers—average people like you and me—paying higher prices as a result of tariffs.
Not all tariffs are bad. Targeted tariffs—tariffs that apply only to imports of specific products—can be very good for the economy without doing much harm to consumers. Let’s use cars as an example. If an American-made Ford and a Japanese-made Toyota each cost $40,000, but a tariff that is applied to foreign automobiles makes the Japanese car cost $45,000, Americans will buy more Fords and fewer Toyotas, leading to more high-paying jobs making cars within the U.S. A similar dynamic can be applied to other sectors that have strong manufacturing infrastructure already established in the U.S., such as semiconductors or airplanes.
The tariffs announced by Trump last Wednesday are the opposite of narrow, targeted tariffs that can help boost the manufacturing sector domestically. They are set to apply to all imports, regardless of whether or not the U.S. can compete with the foreign countries. For example, rare metals are going to be subject to tariffs despite the fact that there are no known deposits in the U.S. These tariffs will not boost the domestic economy; they will raise prices and nothing else. Similarly, coffee imports are going to be subject to the tariffs. Less than one percent of coffee beans used in the United States are grown domestically. The only place in the U.S. with a climate suitable for growing coffee is Hawaii. Hawaiian coffee is already more expensive than foreign coffee because of its unique taste and small growing area. Hawaiian coffee cannot replace all foreign coffee imports regardless of tariffs; there is not enough land to grow it.
This explains why across-the-board tariffs are a bad idea even when rolled out properly. However, Trump’s tariffs were the opposite of rolled out properly. The formula that he used to calculate the tariffs is one that economists have said is “totally silly” and “makes no sense.” Additionally, even if we were to pretend that the formula that they used had some actual basis in economic theory (which it doesn’t), the White House still calculated it incorrectly. This resulted in tariffs that were about four times higher than they otherwise would have been.
Even putting aside the ridiculous way in which these tariffs were calculated, the countries that they were imposed on do not make sense. Australia will be subject to tariffs of only 10%; however, the Australian territory of Norfolk Island will be subject to a 42% tariff. Additionally, the Heard and McDonald Islands are subject to 10% tariffs. Both islands have no human inhabitants, just penguins. One country, however, was notably missing from the list of tariffed countries: Russia. The White House claims that Russia was not tariffed because there are already sanctions that prevent trade with them. While there are sanctions, there was still $3.5 billion in trade between the U.S. in Russia in 2024, meaning that the argument from the White House is untrue.
These are some of the many, many reasons why Trump’s tariff policies are bad for the U.S. economy. There are far more reasons that I could go into, but I think you get the idea. After all, the results of the tariff announcement speak for themselves. The stock market crashed immediately after the president’s announcement, leading to more than $6 trillion in losses in two days. Other countries are imposing their own tariffs that will hurt American businesses. Economists at J.P. Morgan predicted a 60% chance of a recession in 2025. Longtime U.S. allies have announced that their friendship with us “is over.” These were the consequences of just the announcement of planned tariffs; the actual effects will occur in 90 days and, unless Trump changes course, will be far, far worse.
