Economists have cautioned that President Donald Trump’s pledge to enact broad tariffs on his first day in office could result in higher prices for Americans and harm American companies, but it is unlikely to be implemented.
According to a person familiar with the plans, Trump will instead order federal agencies to look into various aspects of trade policy and suggest steps. According to the source, the agencies will also be instructed to examine current trade deals and tariffs, such as the USMCA, which was negotiated during Trump’s first term, as well as regulations pertaining to intellectual property rights and the purchase of goods manufactured in the United States. In order to collect tariff money, the administration will also research the possibility of establishing an External money Service.
An administration official verified the Wall Street Journal’s initial report on the intentions.
Trump had previously declared that he would impose a 25% tariff on all goods entering the United States from Canada and Mexico on his first day in office. Until drugs, especially fentanyl, and all illegal aliens halt their invasion of our country, the tariff will stay in effect! On November 25, Trump stated in an aposton Truth Social.
On his first day in office, he also promised to levy a 10% tariff on Chinese goods, which would remain in effect until the nation ceased exporting fentanyl to the United States. He had vowed to impose a tariff of up to 60% on China throughout his campaign.
During his presidential campaign, Trump emphasized tariffs as a key component of his strategy for expanding the American economy. He has maintained that by raising the cost of goods from abroad and encouraging businesses to move their manufacturing to the United States in order to avoid paying tariffs, they would shield American industries from unfair competition.
He has also advocated using tariffs as a bargaining tool to obtain concessions from nations and using the money raised from them to fund other policy initiatives.
Economists, however, have cautioned that tariffs will raise prices and cause yet another round of inflation. Due to increased prices for importing materials, parts, and components from China, economists determined that the tariffs put in place during Trump’s first term led to a net loss of manufacturing employment and a decrease in company investments.
Almost all of the tariff revenue was used to compensate farmers for losses incurred as a result of China’s retaliatory tariffs on American agricultural products. Additionally, China has not fulfilled its obligations under a trade agreement established during Trump’s first term, and the tariffs did not result in any notable concessions from the country.
Canada and Mexico promised to impose their own retaliatory tariffs on U.S. exports in response to Trump’s recent tariff threat. Because cars and their parts travel back and forth between the United States, Canada, and Mexico several times during the production cycle, it could seriously disrupt the U.S. auto sector.
The USMCA trade agreement between the United States, Mexico, and Canada—which Trump hailed at the time as a significant negotiating win—would also be overturned by the tariffs. Like they have for decades under the NAFTA agreement, goods were able to travel freely between the three nations under that accord. The agreement is not subject to renegotiation in July 2026, as per the conditions of the agreement.