What Will Trump’s Tariffs Do for U.S. Consumers, Workers, and Businesses?

President Donald Trump has launched the United States into a trade war, the likes of which has not been seen in decades. On April 2, 2025, the date that the president and his advisers are calling “Liberation Day,” the Trump administration is expected to announce a sweeping set of tariffs against “all countries.”

The Trump administration’s “reciprocal tariffs” are ostensibly designed to charge other countries what they charge the United States—an eye-for-an-eye approach to trade relations. Given their regressive nature, the economic burden of the Trump administration’s tariffs will fall on U.S. consumers—particularly low- and middle-income households—as well as on U.S. producers that rely on imports to manufacture in the United States.

White House aide Peter Navarro recently said that the administration’s new auto tariffs, for example, would raise $100 billion annually and that other tariffs would generate $600 billion annually. This comes at a time when the administration is looking for opportunities to raise substantial revenue to offset the cost of massive tax breaks for its wealthiest donors. Taking Navarro’s numbers at face value, the Center for American Progress estimates Trump’s tariffs could cost American households an average of $5,200 every year.*

The Trump administration has already placed 25 percent duties on most imports from the United States’ two largest trading partners, Canada and Mexico; imposed 20 percent tariffs on Chinese imports; and last week announced a 25 percent tariff on all imported cars and auto parts. Taken together, these actions—and the retaliatory measures they have already provoked—will cause significant damage to the U.S. economy. They are likely to reduce job prospects; raise prices for electricity, cars, and other everyday goods; and ultimately make it harder for businesses to compete in global markets.

This article raises questions about the cost of Trump’s reckless trade wars for Americans. Will Trump’s trade wars affect U.S. jobs? Will they increase or decrease working families’ prosperity? Will the administration’s policies position the country’s industrial base to compete effectively in the future? And, recognizing that economic supply chains and security challenges are heavily interconnected, what will the consequence be for U.S. foreign relations?

The Trump administration’s goals for all its tariff chaos can be hard to discern. The official U.S. government trade strategy published by President Trump’s U.S. trade representative on March 3, 2025, laid out three objectives: “an increase in the manufacturing sector’s share of gross domestic product; an increase in real median household income; and a decrease in the size of the trade in goods deficit.” Notably, the first Trump administration failed on two of those three counts: The share of manufacturing to overall gross domestic product (GDP) declined on Trump’s watch, while the trade deficit increased.

In terms of “reciprocal” tariffs, Trump has suggested that each country would receive a unique tariff rate not based on what an imported product is but rather on where the product comes from. The administration will determine this tariff rate based—among other factors—on an assessment of that country’s tariffs, tax structure, and regulatory decisions. Taken together, the imposition of massive new tariffs that fail to distinguish between friend and foe is likely to have significant negative impacts on the U.S. economy and on the country’s ability to work collaboratively with partners and allies in the future.

Some administration advisers, such as former U.S. Trade Representative Robert Lighthizer, view tariffs as a way to reshore manufacturing. This is a legitimate goal, but one that cannot be achieved through tariffs alone. Others see tariffs and the threat of tariffs as a means to extract concessions from other countries in a demonstration of American power, though thus far claims from the administration of great successes have turned out to be steps other governments had already planned to take, including Canada’s appointment of a “fentanyl czar” and Mexico’s decision to move additional troops to the U.S. border. Another view espoused by Navarro and U.S. Secretary of Commerce Howard Lutnick sees tariffs as a means to generate revenue to fund tax cuts or a sovereign wealth fund.

The Trump administration’s trade goals are fundamentally at odds with one another. For example, if reshoring manufacturing were successful, then there would be fewer imports available to tax and raise revenue from. Or if the goal is to raise revenue in the long run, that is inconsistent with steep on-again, off-again tariffs designed to compel action from others. Additionally, revenue, jobs, and manufacturing will all suffer if ongoing trade wars dampen consumption and weaken the overall business investment.

Will Trump’s strategy hurt or boost jobs?

The Trump administration’s has tried the tariff-and-tax-cut approach to economic policy before, and during the president’s first term, it resulted in a net loss of manufacturing jobs. This stands in contrast to the Biden administration’s worker-centric trade policy, the centerpiece of which were historic investments in American manufacturing that helped spur nearly 800,000 new manufacturing jobs and more than $1 trillion of private sector investment into U.S. manufacturing.

In fact, the Trump administration is currently seeking to undo investments in manufacturing, the sources of future job creation. President Trump does not appear to be using complementary policies—such as national investment, procurement, regulation, and more—to create and sustain jobs, particularly in manufacturing, which are approaches used by previous administrations and other countries.

Will Trump’s strategy bring prosperity to working Americans?

Will the Trump administration’s trade actions bring greater prosperity to working- and middle-class Americans? That is unlikely, as Trump’s trade wars will result in higher prices on imported goods. A February 2025 analysis by the Budget Lab at Yale found that if the United States were to match other countries’ tariff and value-added tax (VAT) rates, the result would be a 13 percentage point hike in the U.S. effective tariff rate, and U.S. consumers would see price levels rise by 1.7 to 2.1 percent. Importantly, price increases will hit lower-income people the hardest. This is consistent with a 2024 study by economists at the Massachusetts Institute of Technology, Harvard, the World Bank, and the University of Zurich that found that Trump’s first-term tariffs had not “provided economic help to the U.S. heartland.”

Moreover, the on-again, off-again nature of Trump’s tariffs means businesses have not had the policy certainty necessary to support new investments in the United States. Automakers, for example, have been slow to reorient their supply chains due to the uncertainty of the administration’s tariff actions. Given that so many U.S. manufacturers rely on imported materials or component parts to produce in the United States, the Trump administration’s actions will likely make U.S. producers less competitive given their higher operating costs, something already evident in the March 2025 numbers for manufacturer purchasing. The net effect will likely be new downward pressure on wages and benefits.

Trump’s trade wars have also already engendered retaliatory tariffs or other retaliatory measures against U.S. products. This not only makes it more expensive for American manufacturers to import the products they need to produce in the United States but also makes it harder for them to export. Add to that the Trump administration’s consistent hostility toward unionization, and it is highly unlikely that Trump’s trade actions, particularly as assessed alongside his other economic and tax policies, will bring new prosperity to working people.

Will Trump’s tariffs strengthen U.S. industry to compete in the 21st century?

Another metric to test the success of the Trump administration’s trade and economic strategy is whether it positions U.S. industry and its workers to compete effectively in the global economy. Will it create good-paying jobs that will be sustained in the future? Will it train workers to succeed in those jobs, both within the ranks of the existing workforce and the workforce of tomorrow? And will it ensure a technological lead to enable American firms to compete successfully against foreign rivals? Given the devastation the Trump administration has already wrought on research and development expenditures, its pullback on funding for America’s leading research institutions, and the loss of so many federal science jobs, it is almost certain that Trump will fail on this count.

There is a time and place for tariffs to be used strategically as part of a plan to ensure that the future is made in America. The Trump administration’s tariffs are anything but strategic. A more fruitful approach to bolstering U.S. competitiveness would be to pursue an investment plan focused on key industries of the future—such as artificial intelligence, quantum computing, critical minerals processing, clean energy manufacturing, and 3D printing. Moreover, the United States should work with international partners to build momentum for a climate-aligned trade system that would reward high-standard firms that have decarbonized their production and supply chains with preferential market access. Such a system could also include strong prerequisites for joining tied to workers’ rights, a joint strategy to address China’s nonmarket competition, and broad climate action. Unfortunately, the Trump administration appears focused on industries such as oil and gas, while other countries are modernizing their manufacturing bases and leaping ahead on clean energy.

Will Trump’s strategy strengthen U.S. partnerships and alliances?

Already, Trump’s trade wars are undermining the partnerships and alliances necessary to address shared challenges. By implementing and threatening tariffs against the United States’ largest trading partners, the Trump administration is breaking the trust of allies whose collaboration is needed to solve shared global challenges. The United States should be leading a global coalition that stands up to China for its nonmarket practices, state support for steel and aluminum, and manufacturing dominance in industries such as clean energy. What will happen the next time the United States needs support from Canada, the European Union, the United Kingdom, or Japan?

The Trump administration’s tariffs on autos and auto parts threatens to undermine coordination the United States had forged with the European Union and Canada to prevent a flood of Chinese electric vehicle imports intended to undercut American producers. Now, all of that cooperation has been abandoned as China seeks to exploit the deep-seated animosity of the United States’ traditional partners and allies for its own gain. South Korea and Japan have already joined China in an agreement to promote more regional trade.

Conclusion 

The Trump administration’s proposed reciprocal tariffs will force America’s middle class to foot the bill for the tax giveaways President Trump and the congressional majority are pursuing through legislation. They are adding fuel to Trump’s chaotic trade wars, which are dragging down investment, eliminating American jobs, and raising prices for American families. It is important that the United States plays a leading role in producing the technologies and products that define the coming decades. Trump’s reckless trade wars are not the way to do it.

*Author’s note: The average tariff burden is estimated by dividing the total expected tariff revenue per year by the total number of U.S. households in 2024 (132 million).