Former President Donald Trump’s economic nationalism has had a profound effect on American trade policy and practice. His use of tariffs in this way has completely upended the rules of the game upon which international commerce operates. Trump initially made a splash by announcing a 50% tariff on steel and a 25% tariff on aluminum. In August, he broadened these tariffs to cover more than 400 other products, employing them to retaliate against unfair trade practices and fortify American manufacturing. His administration’s tariffs have created a perfect storm of prevailing economic conditions. This effect is not limited to China’s impact on trade talks with the U.S.
Trump’s punitive trade war with China has raised tariffs on Chinese import to an average of 47.5%. This new approach affects every single positive imported from China. This escalation has prompted furious backlash from the Chinese. In retaliation, China has applied their own average tariff of 31.9% on American exports. Since taking office on January 20, 2025, Trump’s administration has raised US tariffs by 26.8 percentage points, marking a significant shift in America’s trade policy.
Tariff Implementation and Trade War Dynamics
This is the core of Trump’s strategy, which is to slap tariffs on pretty much everything coming into the US. He should use, or rather mis-use, these tariffs as a strong arm negotiating tactic for economic purposes. Initially focused on steel and aluminum imports, Trump expanded his tariff agenda to include a diverse range of products, citing the need to protect American jobs and industries from what he termed “unfair trade practices.”
Tariffs give American manufacturers the kind of level playing field they need to compete, said the anonymous source familiar with Trump’s policy-making style. They think that makes it a fair playing field for everyone. This resentment reverberates through every one of Trump’s messages and stump speeches.
Trump has unilaterally imposed tariffs on imports. Now, he promises to impose additional onerous requirements on countries negotiating trade agreements with the US. This particular tactic is intended as a wake-up call. It further serves as a negotiation chip, demonstrating for the rest of the world that the US are no pushovers in negotiation.
Tensions with China are at a fever pitch. Many analysts are hopeful that the damage that President Trump’s trade war has caused can be limited to U.S.-China relations. The effects of these tariffs have sent shockwaves through financial markets, creating historic levels of uncertainty for all of 2025.
Economic Criticism and Interest Rate Controversies
In addition to imposing tariffs, Trump has repeatedly attacked Federal Reserve Chair Jerome Powell as the president tries to keep monetary policy conservative. He has called for lower interest rates as well, arguing that Powell’s policy will destabilize the market.
In other words, I want my new Fed Chairman to lower interest rates when the market is booming. Don’t kill the market for no reason,” Trump said in one of his many media appearances.
His attack on Powell then escalated in a dramatic way. He named the Fed Chair “Too Late,” a “major loser,” and a “fool.” This statement is indicative of the executive branch vs. central bank dynamic throughout his presidency.
Trump further compounded the confusion by then choosing as chair of the Council of Economic Advisors one Stephen Miran. He nominated Miran to fill an open slot on his Federal Reserve Board of Governors. This decision shocked most economists. First, they feared his many conflicts of interest and that Miran’s appointment would move monetary policy too close to those Trump’s fiscal priorities.
Broader Implications on Global Trade Relationships
The real damage from Trump’s trade policies was done to China. Their legacy includes knocking India and Brazil out of the ballpark, so to speak. He has used trade tensions as a cudgel not only in negotiations, but as an expression of his administration’s new, muscular orientation toward the world of trade.
The repercussions of these policies are profound. As an example, Chinese retaliatory tariffs on US goods have risen to such a level that they now blanket all American exports with strongly prohibitive tariffs. The effects of the trade war still plague both countries’ economies and shape the wider landscape of global markets.
Amidst the storm, there are some economists who believe these tariffs might be what it takes to actually strengthen domestic manufacturing. Many of their fellow experts warn that the long-term effects might be dangerous. They lament that enterprises are experiencing increasing expenses and a volatile marketplace.
Yet as Trump’s administration has continued on, it has become clear that his tariff strategy has created a tangled nexus of economic diplomacy. Articulating a clear path through this environment will be critical to ensuring continued certainty for businesses at home and abroad.