Trump’s Tariff Plan for His Second Term: A Breakdown

Compared to his first term, Donald Trump has promised to levy even higher tariffs: an extra 10% tariff on China on top of any existing tariffs, a 25% tax on all imports from Canada and Mexico, and a 20% tariff on everyone else.

Please note that tariffs on Chinese goods are currently at 25% for most items, so the additional 10% is a significant hike. Trump reportedly also mentioned a 60% tariff on Chinese goods, but the exact amount is still to be set.

Tariffs, which are taxes on imported goods, have been a key part of his strategy to protect American industries and reduce dependence on foreign products. His new strategy builds on what worked during his first term, with a focus on strengthening American industries, decreasing the country’s dependence on foreign goods, and making the U.S. economy more self-reliant.

The United States is the world's leading importer. China, Mexico, and Canada combine for about 40% of the $3.2tn of goods it imports each year. If these tariffs are implemented long-term, they could generate $1.2 trillion in tax revenue from 2025 through 2034.

How High Will Tariffs Be in Trump’s Second Term?

In Trump’s second term, the standard tariff for Chinese goods will be an extra 10% on top of existing taxes, the tariffs for non-Chinese imports will be 20%, the tariffs for the once NAFTA companions will be 25%, and some miscellaneous goods like Mexican automobiles could be taxed up with a 100% tariff.

One of his key proposals is a universal import tariff. Even though he has since talked about a 20% tariff, Trump has proposed a blanket 10% tariff on all imports, dubbed a “Ring Around the U.S. Economy.” Like in his first term, this measure will shield American industries from foreign competition and spur homegrown production.

Another focus is on making supply chains stronger. Trump wants to lower the country’s reliance on other nations for pressing goods like semiconductors, medicines, and rare earth minerals, so that these critical items are either sourced or produced in the U.S.

Trump also plans to expand tariffs on Chinese goods to target industries involved in unfair trade practices and intellectual property theft. His goal is to push back against China while protecting American businesses.

Finally, Trump has promised more support for U.S. farmers and manufacturers. He plans to introduce subsidies and programs to help these groups deal with the effects of adverse tariffs and stimulate American breakthroughs.

What to Expect from Tariffs in 2025 and Onwards

One potential issue of tariffs is the economic impact on consumers. A10% tariff on Chinese goods could raise prices for consumers, because companies might transfer the added expenses to the public. Still, this is not a sure thing. With plans to reduce government spending and with less money being printed, inflation will most likely decrease.

Another challenge is the risk of international backlash. If the U.S. adopts overly aggressive tariff policies, other countries might follow suit by imposing their own tariffs on American exports. This could hurt industries, like agriculture and manufacturing, that rely heavily on international markets.

Finally, there’s the question of global trade dynamics. A go-it-alone strategy could strain relationships with key allies and make it harder to work together on shared trade challenges.

What American citizens can expect is that the administration earns at least 80 billion dollars a year from tariffs (that’s a cautious amount based on what Trump raked in during his first term, and this time it could be much higher). The key question is what those dollars will be invested in. One investment or change could be lowering taxes (and compensating those cuts with funds from tariffs).

Will Tariffs Make Inflation Worse? Why Tariffs Won’t Affect Inflation

No, tariffs are not likely to make inflation worse in the United States. In fact, under Trump’s administration, Biden’s inflation is likely to slow down, but for different reasons than tariffs. Inflation is mostly a monetary issue: When a central bank, like the Fed, prints money to keep up with expenditures, like giving citizens a stimulus check, they’ll cause inflation down the line. That’s what the government’s been doing: Increasing spending, financing it with newly-printed money, and thus slowly degrading the value of the dollar. Inflation might look like “higher prices,” but, in essence, it’s a downgraded dollar what drives it. Since circulation increases, a set amount of dollars that can now purchase fewer goods. That’s inflation.

With tariffs, some goods are likely to increase in price, so it’s understandable that some consumers might be worried that inflation will spike from it. But tariffs are instead likely to push American businesses to offer the best products or services they can. The fact is, when importing goods, the playing field is not even, especially because some governments promote the illegal dumping trade (they subsidize companies at a loss so they can sell overseas at impossible prices). Since, with tariffs, American businesses will be competing on a fair playing field, they’ll now have leeway to find the best ways to offer consumers a great product at an excellent price.

With Elon Musk’s and Vivek Ramaswamy’s DOGE unit now up and running, tariffs will be coupled with less bureaucracy to sell or trade goods, and with less spending overall. Inflation will likely taper off, but for causes that are not directly entwined with tariffs.

How Have Markets and Organizations Reacted to Tariffs?

International leaders are definitely paying attention. Christine Lagarde, head of the European Central Bank, recently pressed Europe to work with Trump instead of fighting him on tariffs. She called for negotiations with Trump, who has floated the idea of a 20% tariff on all non-Chinese imports. It’s clear that while some want to avoid confrontation, Trump’s approach is about making sure America gets a fair deal—and he’s not backing down.

Are Tariff Percentages Officially Set?

Tariffs and their exact amounts will be confirmed once Trump takes office. For the time being, they’re based on what he has claimed on the microphone, during his campaign and also since winning the election.

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