Trump’s tariffs. Are they a good thing for America, or not?

February 4, 2025

One of President Donald Trump’s economic tools to equalize relationships with some other countries is to increase tariffs on foreign goods coming into the country, and impose new ones where needed.

Tariffs are taxes imposed upon goods from other countries. There are two types. A specific tariff is a charge for goods without regard for the cost of the goods, somewhat like a flat tax. Ad valorem tariffs are charges based upon the cost of the goods.

Tariffs have been around for as long as trade has existed between countries and are the subject of a vigorous economic debate. Economists do not agree on their exact effect on economic growth and government revenue. 

Trump’s idea, in part, is to get other countries to lower their tariffs on American-made goods. To do so, he will increase tariffs on them, or impose tariffs on them to equalize things, to give them a taste of their own medicine.

An example is that countries in the European Union charge a 10 percent tariff on American automobiles, but the U.S. only charges a 2.5 percent tariff on the autos imported from the European Union. Trump thinks this makes no sense, and has threatened to raise the tariff to 25 percent unless the EU reduces their tariff. There are other similar situations.

Tariffs can also be used to encourage other countries to do things that the U.S. needs and wants, such as an increase of the tariffs to 25 percent on oil and other products coming from Canada and Mexico, and also for Mexico and Canada to do a better job stopping drugs and illegals coming across their borders into our country.

Both Canada and Mexico have objected to this idea that was floated recently. The tariffs were to take effect February 4th.

He is also considering a 10 percent tariff on chemicals coming here from China that are used to make fentanyl, in addition to existing tariffs, and to increase those other tariffs on other Chinese products.

The MasterClass website offers these points on tariffs: “One common reason to enact tariffs is to promote infant industries that may not otherwise be able to compete directly with more developed foreign industries. This theory was extremely important in the early days of the U.S. when high tariffs were used to shield early American industries like textiles and manufacturing.

“Tariffs have also been used to protect industries related to national security. This is why countries often protect their domestic defense and aerospace industries with tariffs on foreign manufacturers, among other policies.” 

Tariffs will likely cause price increases on consumers for imported goods, and that may make imported goods less desirable than goods produced here at home. That will have a positive economic impact. But another positive from tariffs in addition to promoting American industries and protecting them from foreign competition is that they also raise government revenue.

One person schooled in economics, Stephen Miran, defends tariffs. He is President Trump’s nominee to chair the Council of Economic Advisors, and holds a doctorate in economics from Harvard.

Miran supports imposing tariffs of 20 percent on all nations, even our allies, using security guarantees that exist for allies of the U.S. as the leverage for them to submit to the tariffs without retaliating against us.

Jamie Dimon, CEO of JPMorgan Chase, believes that tariffs can help resolve issues like national security and unfair competition.

While Dimon generally supports Trump’s tariff plan, he urged being thoughtful in how they are used. “Like any tool, if it’s misused, it can do damage, too,” he noted. He added that the U.S. must consider the downsides of tariffs when used on key trading partners.

And the Associated Press, no friend of Trump, predictably took the negative side: “The Republican president posted on social media that the tariffs were necessary ‘to protect Americans,’ pressing the three nations to do more to curb the manufacture and export of illicit fentanyl and for Canada and Mexico to reduce illegal immigration into the U.S.

“The tariffs, if sustained, could cause inflation to significantly worsen, threatening the trust that many voters placed in Trump to lower the prices of groceries, gasoline, housing, autos and other goods as he promised. They also risked throwing the global economy and Trump’s political mandate into turmoil just two weeks into his second term.”

The American economy is best served when Americans buy things made here. The more goods and services we produce and sell here, the more businesses and jobs we will have, the more vibrant our economy will be, and the greater the revenue that is collected by the government. 

However, if people buy foreign-made goods rather than domestic goods, our economy is less strong than otherwise.

Yes, there are downsides to tariffs. And, while Trump’s tariffs may make imported goods more expensive, with which many will disagree, by imposing positive aspects into the domestic economy, they will strengthen the economy, and that is certainly a positive result.

Agree, or disagree? Of course, there will be effects of these tariffs. But it will take some time before things shake out and we know if they were a good idea, or a bad idea.