Tariffs in the second Trump administration

During Donald Trump's second presidential term, the United States experienced a radical transformation in its trade policy, characterized by a significant and widespread increase in tariffs. From January to April 2025, the average applied U.S. tariff rate surged from a modest 2.5% to an astonishing 27%, marking the highest level in over a century. While subsequent adjustments and negotiations brought the rate down to an estimated 17.9% by September 2025, the impact was profound.

This period saw U.S. tariff revenue skyrocket, exceeding $30 billion per month, a threefold increase compared to the under $10 billion collected monthly in 2024. This aggressive tariff strategy represented a departure from decades of generally lower tariff policies, signaling a new era of protectionism and a willingness to challenge established global trade norms.

Specific sectors bore the brunt of these new trade measures. Under Section 232 of the Trade Expansion Act of 1962, which allows tariffs for national security reasons, the administration imposed substantial tariffs on key industrial materials. Steel and aluminum imports faced a steep 50% tariff, a measure intended to bolster domestic production and reduce reliance on foreign suppliers. Furthermore, a 25% tariff was levied on imported automobiles from most countries, aiming to protect the U.S. auto industry.

New tariffs were also introduced on pharmaceuticals and semiconductors, though some exceptions were made for companies with manufacturing operations within the U.S., highlighting a complex interplay between protectionism and domestic economic incentives.

A particularly controversial aspect of this tariff policy was the administration's assertion of unprecedented tariff authority under the International Emergency Economic Powers Act (IEEPA). On April 2, 2025, President Trump invoked IEEPA to impose 'reciprocal tariffs' on imports from all nations not already subject to sanctions. A universal 10% tariff took effect on April 5, 2025.

Although plans for more specific, country-level tariffs were delayed by the 2025 stock market crash, they were eventually implemented in August. The closure of the de minimis exemption on August 29, 2025, which had previously allowed packages under $800 to enter duty-free, further expanded the scope of tariffs. This sweeping use of IEEPA triggered significant trade disputes, escalating the existing China–United States trade war and igniting a trade war with neighboring countries Canada and Mexico.

The legality of tariffs imposed under IEEPA was quickly challenged in federal courts, with rulings deeming them illegal. However, these tariffs remained in effect while appeals were processed, culminating in oral arguments before the Supreme Court in November 2025 in the case of Learning Resources v. Trump.

It's important to note that these legal challenges did not encompass tariffs imposed under Section 232 or Section 301 of the Trade Act of 1974. The administration's stated rationale for these tariffs included promoting domestic manufacturing, safeguarding national security, and substituting for income taxes, viewing trade deficits as inherently detrimental. This perspective was met with criticism from economists who argued it reflected a misunderstanding of international trade dynamics.

The actual burden of these tariffs fell on U.S. businesses and consumers. The economic consequences were significant, with downgraded GDP growth projections from major international bodies like the OECD and the World Bank, as well as the Federal Reserve, reflecting the disruptive impact of these trade policies.