Instant Insight

30-Second Take

• President Trump has implemented a sweeping tariff policy, including a 10% tariff on all countries, effective April 5, 2025.
• Country-specific tariffs were set to take effect on April 9, 2025, but a 90-day pause has been announced for most of these duties.
• The tariffs aim to address large and persistent U.S. goods trade deficits and non-reciprocal trade practices.

Quick Brief

2-Minute Digest

Essential Context

President Trump, invoking the International Emergency Economic Powers Act (IEEPA), declared a national emergency due to large and persistent U.S. goods trade deficits. This led to the imposition of a 10% tariff on all countries, effective April 5, 2025. Additionally, country-specific tariffs were planned but have been paused for 90 days.

Core Players

• Donald Trump – President of the United States
• U.S. Trade Representatives – Key in negotiating and implementing trade policies
• Foreign Trading Partners – Countries affected by the new tariff policies, including China, Canada, and Mexico

Key Numbers

• 10% – General tariff rate imposed on all countries
• 90 days – Duration of the pause on country-specific tariffs
• 22.5% – Average effective U.S. tariff rate, the highest since 1909
• $3.0 trillion – Projected revenue from tariffs over 2026-35

Full Depth

Complete Coverage

The Catalyst

The large and persistent U.S. goods trade deficits, coupled with non-reciprocal trade practices and other harmful economic policies by trading partners, triggered the declaration of a national emergency. This led to the imposition of tariffs to rectify these trade imbalances.

President Trump stated that these measures are necessary to protect American workers and industries from unfair trade practices.

Inside Forces

The U.S. economy has seen significant impacts from the tariffs, including a rise in the average effective tariff rate to 22.5%, the highest since 1909. This has led to a 2.3% increase in consumer prices and an estimated $3,800 loss per household in purchasing power.

The tariffs have also affected specific sectors, with apparel prices rising by 33% and food prices increasing by 4.5%.

Power Dynamics

President Trump’s use of IEEPA authority to impose tariffs underscores his administration’s commitment to addressing trade deficits and non-reciprocal trade practices. The 90-day pause on country-specific tariffs suggests a willingness to negotiate and find mutually beneficial solutions.

China has retaliated with 34% tariffs on all U.S. goods imports, effective April 10, 2025, further complicating the trade landscape.

Outside Impact

The broader implications of these tariffs include a projected 0.9% reduction in U.S. real GDP growth in 2025 and a persistent 0.6% reduction in the long run, equivalent to $180 billion annually. The unemployment rate is expected to rise by 0.5 percentage points, and payroll employment is forecasted to be 600,000 lower.

Global economies, particularly Canada, have been significantly affected, with Canada’s long-run economy expected to be 2.0% smaller due to U.S. tariffs and Canadian retaliation.

Future Forces

The future of U.S. trade policy remains uncertain, with ongoing negotiations and potential adjustments to the tariff structure. The 90-day pause on country-specific tariffs provides a window for diplomatic efforts to resolve trade disputes.

Key areas to watch include the impact of retaliatory measures from trading partners and the long-term effects on the U.S. and global economies.

Data Points

• April 5, 2025: 10% tariff on all countries took effect
• April 9, 2025: Country-specific tariffs were set to take effect but were paused for 90 days
• April 10, 2025: China imposed 34% retaliatory tariffs on U.S. goods imports
• 2.3% – Short-run increase in consumer prices due to 2025 tariffs
• $3.8 billion – Average household consumer loss in purchasing power due to 2025 tariffs