Trump’s First-Term Tariff Policies and Their Impact

Tariffs, or taxes on imported goods, earned the American customs around $250 billion in extra dollars during Trump’s first administration. Still, depending on whom you ask, they’re either a symbol of protectionism or a source of economic disruption.

Either way, during Donald Trump’s presidency, tariffs, which aimed to reset the balance of trade in favor of the United States, became a key aspect of his “America First” agenda. In 2019, these measures generated $79 billion in revenue for the U.S. government—more than double of what the previous government’s tariffs had collected in 2015.

What are Tariffs, and why do they matter? Trump tariffs explained

Tariffs are taxes on imported goods designed to protect domestic industries by making foreign products more expensive. This creates incentives for consuming goods made locally and boosts domestic production, which, in turn, protects jobs. Still, if improperly applied, tariffs can also lead to increased costs for consumers and negative reactions from trading partners. In the worst-case scenario, this could lead to a trade war that disrupts global commerce.

During his first term, Trump—who realized that past trade agreements unfairly disadvantaged American workers and industries—used tariffs as both an economic tool and a geopolitical bargaining chip. Tariffs helped his administration redefine global trade relationships and work them out in America’s favor.

For example, during his first presidency, tariffs meant that imported goods from China, such as electronics, machinery, and textiles, were hit with duties as high as 25%. This increased costs for Chinese exporters and drove American businesses to look for domestic alternatives to foreign goods, which helped national industries continue to expand.

Trump’s first-term tariff policies: Trump China tariffs

When Donald Trump campaigned on his “America First” platform, tariffs were a key part of his economic strategy. His plan primarily targeted China, the European Union, Canada, and Mexico. It revolved around three key pillars.

First, Trump wanted to fix trade imbalances. He believed the large trade deficits with countries like China represented unfair trade practices that hurt American jobs and industries.

Second, his tariffs targeted intellectual property theft, especially by China. The goal was to punish countries for stealing U.S. R&D or for forcing American companies to share their technology.

Finally, Trump sought to bring back American manufacturing. The administration added tariffs on imports like steel and aluminum, which aimed to protect struggling industries and create more jobs at home. These steps were part of his effort to boost the U.S. economy and reduce reliance on foreign goods.

Major tariff measures during Trump’s first term

Trump’s first-term tariff policies redefined trade relations and domestic industries. These measures were aimed at correcting trade imbalances and protecting American jobs. Here’s a closer look at some of the most significant tariff measures:

Steel and aluminum tariffs: The U.S. administration imposed a 25% tariff on steel and a 10% tariff on aluminum in 2018, which affected imports from several countries and boosted U.S. production.

China Trade War: Perhaps the most significant aspect of Trump’s tariff plan was his trade war with China. The administration imposed tariffs on over $360 billion worth of Chinese imports, citing unfair trade practices and intellectual property concerns. One watershed moment many shoppers remember was when, in 2018, Trump stamped a 25% tariff on thousands of Chinese goods. China hit back with tariffs targeting U.S. agricultural and manufactured goods. 

USMCA renegotiation: Tariffs on Canadian and Mexican goods were used to leverage the replacement of NAFTA with the United States-Mexico-Canada Agreement (USMCA), which introduced stricter labor and manufacturing provisions and aimed to create more jobs for American workers, like, for example, forcing car factories to leave Mexico and instead set up shop in the United States.

Why tariffs worked in Trump’s first term

Trump’s first-term tariffs had a significant effect on the American economy. It’s true: Some industries had it easier than others. Sectors like steel and aluminum saw gains in production and employment as reduced foreign competition prompted U.S. producers to grow. The U.S. Geological Survey, which got its data from the American Iron and Steel Institute, showed an increase in raw steel production of 10.8% in 2016–2018, which left steel production almost on par with the pre-2008 financial crisis levels. 

Tariffs also came in as a major tool in trade negotiations and gave Trump’s administration leverage to secure deals such as the USMCA, which included numerous favorable terms for American workers. Additionally, the tariffs exposed unfair trade practices by major partners like China’s dumping policy, which drew attention to issues such as intellectual property theft and trade imbalances.

Still, tariffs brought some downsides. For American consumers, the higher taxes on imports led to increased costs on goods, from electronics to everyday necessities, and some households had to suddenly deal with more restrictive budgets. Farmers were hit particularly hard by retaliatory tariffs from trade partners like China, which reduced exports of key products such as soybeans, pork, and dairy. In fact, the Trump administration is already focused on helping farmers, possibly due to the learnings from the first-term tariff program.

But, overall, it’s a safe assumption to say that tariffs worked out well in Trump’s first term, especially because they raised billions of dollars while protecting American jobs. Those billions of surplus dollars, if re-invested wisely, can kick off a virtuous cycle for the economy.

Please leave your opinions / comments on these stories below, we appreciate your perspective!