Upon being elected to the White House, American President Donald Trump made several radical decisions through executive actions. Amongst them were several economic policy decisions that rattled the global economies and their interrelation with American international trade. Reciprocal and targeted tariffs were acted upon to justify American interests.
However, the effects of those decisions may not always be in America’s favour, which means America may not be enjoying the economic autonomy it has since the post-Cold War era.
During his first term, Trump announced tariffs on several of its trading partners in 2018-19 triggering a trade war. After him, the Biden administration upheld those terms without any change. In 2025 after his re-election trump again passed economic tariffs through several executive orders, staying true to his campaign promises. Tariffs announced in early February came into effect in March and April in several sectors of American imports.
Specific US tariffs Acted upon Countries
- With Canada tariffs imposed on 25% non-energy and 10% energy imports. Up to $253 Billion worth of imports are to be affected, even with several exemptions still in place. The tariffs announced on Feb 1st were set to be effective on March 4 and extended to take effect on April 5th and 6th.
- A 25% tariff is to be imposed on Mexico for all goods and imports from Mexico. With exemptions in effect, this will have an impact on $236 Billion in trade between the two countries. The new tariffs will apply from April 4th after a one-month extension.
- With China an initial tariff of 10% was announced, which then increased to 20%, along with the previous tariffs that were effective since 2019. $430 billion worth of imports from all sectors will be affected.
- The European Union is facing 25% tariffs on all imports that went effective on the 4th of March, estimating $598 Billion load on all trade imports.
US Tariffs on different imports
- On Steel and Aluminium, the USA is planning to end several exemptions and impose new additional tariffs of 25%. Steel exemptions of $29 billion, aluminium exemptions of $12 billion and $44 billion on the products of their derivatives are set to end. An additional $100 Billion on products containing various metals is also set to apply under the new tariff guidelines.
- In the motor and automobile sector $244B tariffs and on motor parts $83B is set to be applied at 25%.
- Goods and materials of copper will bear a $17B tariff weight.
- Semiconductor and pharmaceutical sector trade will also face a tariff of 25%.
Effect of US Tariffs Around the World
The tariffs have both economic and bilateral consequences. The economic consequences are both long and short-term. The initial days of tariff imposition will see a surge in tax revenue for the USA. The government treasury will be the direct beneficiary of import tariffs. In the long term, it will put pressure on the supply chain, manufacturers and the wages dependent upon them. Assimilation of raw materials will become a massive hurdle for American manufacturers. Small and medium-sized companies will bear the brunt as well as the consumers dependent on tariffed products and their derivatives.
Another aspect of it is the rising tension in bilateral relationships and the tariff war that comes after that. Reciprocal tariffs are the earliest signs of this. China announced retaliatory tariffs on about $13.9 billion worth of US exports at rates of 10% and 15%, which took effect on February 10. It also announced additional retaliation on March 4th which took effect March 10th and targets $2.9 billion of US agriculture exports at 15% and another $16.6 billion of US agriculture exports at 10%.
Canada placed 25% retaliatory tariffs on $20.8 billion of US exports on March 4, with 25% tariffs on another $86.7 billion scheduled for March 23 in response to the IEEPA tariffs. Ontario planned to impose a 25% tax on electricity exports to the US, but that tax is currently suspended. In response to the steel and aluminium tariffs, Canada announced to target of approximately $20.7 billion of US exports with 25% tariffs beginning from March 13th, including $8.8 billion of steel exports and $2.1 billion of aluminium exports.
The European Union also announced retaliatory tariffs against the steel and aluminium tariffs on approximately $28 billion of US exports. The first round will take effect April 1 on $8 billion of US exports, and the remainder will take effect in mid-April. Targeted products include iconic American exports, such as Harley Davidson motorcycles, blue jeans, and bourbon.
Apart from these countries could also diversify their export revenues challenging the economic dependency on America. Mutual economic interests also account for good bilateral and security relations. This is challenged when there is no stake to protect between two countries. With emerging markets in the Middle East and Asia, it won’t be wrong to say that a chunk of the trade will shift there instead of America.
In a positive turn, the tariffs will also address bad trade practices that America have with certain countries. Products and goods that are relevant to North American geography will find a nurturing environment with the elimination of other players in the American market.
Historical evidence shows that trade wars through tariffs bring testability and affect negatively the pockets of consumers and workers.
US Tariff Effects on India
The US is set to impose reciprocal tariffs on India from April 2. According to research put forth by the State Bank Of India, the trade decline due to the tariffs will be minimal and recoverable. India will face an estimated 3-3.5% trade decline as a result of tariffs and the country’s growing manufacturing and service industry will negate the effect caused by this. India is also looking to recover this cost from the US in exports of steel and aluminium which are in trade deficit with the US. India is also continuously diversifying its export targets through various trade deals and Free Trade Agreements (FTA). India has signed 13 FTAs in the last five years with its trading partners like Mauritius, the UAE, Australia, etc. It is also negotiating FTAs with the UK, New Zealand, and the EU, targeting sectors like services, digital trade, and sustainable development.
During Prime Minister Narendra Modi’s visit to Washington last month, India and the US announced their commitment to more than double the two-way commerce to $500 billion by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector bilateral trade agreement (BTA) by fall of 2025. Thus, it is very unlikely that India’s trade exports will be negatively from this tariff war by the Trump administration. However, only time will tell how this step shapes up for the US of America.