Donald Trump attended the polls on November 5 with tariffs as the main economic recipe. Although he promised to impose taxes of all kinds on exports, curiously the first he approved – although he has suspended – did not appear in his electoral campaign catalog. How much of Trump’s threats will take effect and which part remains as a negotiating ploy to start concessions is something that is still to be seen. In any case, the tariffs that the president of the United States has promised are of an order of magnitude much higher than those approved in his first mandate and were then maintained by his successor, Joe Biden.
With Mexico and Canada it has taken the pressure to the limit, decreeing the tariffs on a Saturday and suspending its entry into force on a Monday. It is not the first time, however, that Trump resorts to that strategy. In May 2019, the White House announced that Trump would use the powers of the International Emergency Emergency Powers Law (IEEPA) to introduce tariffs on Mexican exports in response to the national security threat of illegal immigration from Mexico to the United States . In addition, in August of that year he tweeted that he ordered American companies to begin looking for alternatives to China with the powers of the IEEPA, but without ever formally declared an emergency as required that law.
In January 2018, Trump imposed tariffs from 20% to 50% to solar panels and washing machines, which mainly affected China and South Korea. In March of that year, he imposed 25% tariffs on steel and 10% to aluminum to most countries, under section 232 of the Commercial Expansion Law of 1962. That law allows the President to raise tariffs on tariffs on Imports that suppose a threat to national security without the approval of Congress after an investigation by the Department of Commerce. “Commercial wars are good and easy to win,” the president then tweeted. In June, those tariffs and steel extended to the European Union and Mexico.
In April and June, China and the European Union, respectively, responded with retaliation actions against US exports, especially agricultural products. In the European case, tariffs affected about 6,400 million euros of steel and aluminum exports. In response, the EU introduced readjustment tariffs on US exports to the EU for a value of 2.8 billion euros.
Mexico and Canada also responded, but the United States negotiations with their North American neighbors allowed tariffs on steel and aluminum on May 20, 2019 to both of them, which joined Australia and Argentina as exempt countries.
Spain had already been beaten before, in November 2017 and January 2018, with a very specific tariff to black olives producers. Applied 17% rates after an investigation that the Department of Commerce initiated in summer of 2017 in response to the complaints of several California producers against the Spanish black olive for unfair competition by benefiting from allegedly unfair subsidies.
In June 2018, Trump announced tariff rates for a list of goods imported from China for about 50,000 million dollars, a fraction of exchanges between the two, but that was enough to unleash a commercial war between the two superpowers. An escalation began that was expanding the products affected by tariffs in both sense. China quickly reacted with considerable retaliation tariffs on US exports. In the summer and autumn of 2019, the United States extended Chinese imports subject to tariffs and increased taxes from 10% to 25%. China reacted again. In less than two years, the United States middle tariff over Chinese products jumped from 3.1% to 21.0%, while the Middle Chinese tariff on US products increased from 8.0% to 21.8%, According to a report published by the National Economic Research Office this year.
The commercial war escalation ended in January 2020, when the United States and China reached an agreement that maintained most tariffs, but established objectives for Chinese imports of American products. Shortly after, the outbreak of the pandemic seriously disturbed international trade and those objectives were never met.
Joe Biden imposed protectionist measures in relation to electric cars and Chinese semiconductors. It also increased tariffs on steel and aluminum to China, but negotiated an agreement with the EU. The United States replaced tariffs with a contingent system on the basis of historical transactions volumes, which resulted in the EU steel and aluminum over the contingent continued to be subject to tariffs. Brussels, meanwhile, left his reprisals suspended.
Job cut
Trump’s tariffs benefited the steel industry, but harmed the economy as a whole, according to subsequent analyzes. General Motors announced the closure of plants in Maryland, Michigan, Ohio and Ontario, and the suppression of more than 14,000 jobs, claiming tariffs on steel as one of the explanations. The CBER report concludes that Trump’s commercial war had a negative effect on employment, but positive on its electoral support. Among the possible explanations to that paradox about the popularity of tariffs is the fact that voters were not sufficiently informed of the effects and let themselves be carried away by Trump’s triumphalist rhetoric, which linked any investment or creation of employment to tariffs although I had nothing to do with them. It is also possible that even those who were not convinced that there had been results valued Trump’s efforts to face China and try to protect US jobs.

The first wave of Trump tariffs also had inflationary effects, according to the vast majority of studies, but limited, since its scope was also limited. There were price increases in the affected sectors, and inflation exceeded for a long time the price stability objective of 2%, but never exceeded 3% during Trump’s mandate. In addition, with the pandemic, inflation fell strongly and was in just 1.4% when Biden assumed the position.
The effect of the tariffs that Trump plans (or that announces as a negotiation weapon) would be much greater, according to experts, both because they would affect a much greater amount of goods and for how recent is the last inflationary episode. Its application could have effects on inflation, labor market and interest rates, causing distortions in the production chain and supplies, and also forcing companies to advance purchases, renegotiate contracts or seek alternative suppliers.
This time, Trump proposed campaigning to impose reciprocal tariffs on US imports equal to the types that commercial partners impose on exports from the United States (generally, older). That would be added (or overlap) a universal basic tariff from 10% to 20% above all imports. For China, Trump promised a 60% tariff above all imports. In addition, he said he would put 100% tariffs for cars imported from Mexico, although that proposal seems to have fallen into oblivion.
However, he has begun with other measures that he had not spoken in the campaign, but shown as threat for the first time being an elected president. These are 25% tariffs to Mexico and Canada (with the exception of 10% for Canadian energy products) and 10% to China. Those of Mexico and Canada have been suspended and those of China may also be postponed.