Professors Analyze the Impact of Trump's Proposed Tariffs

As President Trump embarks on his second term, he is redefining his approach to the U.S. economy. Central to his agenda are plans to impose high tariffs aimed at leveling competition with Canada, Mexico, and China.

Trump has indicated a timeline for introducing these tariffs around February 1. Tariffs function as taxes on imported goods, potentially raising prices for American consumers.

The implications of these tariffs are hotly debated among economists and trade specialists, but there is a consensus that Americans should brace for increased costs on various products.

According to Lourenco Paz, an associate professor of economics, many of Trump's tariff proposals could be viewed as “negotiating tactics” related to broader economic or immigration policies. Paz explains that, given the economic dynamics, smaller economies like Canada and Mexico could be more adversely affected by a trade war, thus increasing their likelihood of returning to the negotiation table.

This approach aligns with Trump's history of tough negotiating, as seen during his first term when he altered the North American Free Trade Agreement (NAFTA) to establish the United States–Mexico–Canada Agreement (USMCA), benefitting American automakers.

Despite the expectation that these tariffs might entice Canada and Mexico into negotiations and potentially revive U.S. manufacturing jobs, the actual outcomes could be quite complex.

“One of the problems with this administration is the ambiguity surrounding their intentions,” Paz notes. “Is this a tactic connected to immigration policy, or is it gearing up for next year’s USMCA negotiations?”

As the U.S. inflation rate hovers around 2.89%, with goals to lower it to about 2%, a primary concern with the introduction of these tariffs is the risk of igniting a trade war. Should other nations retaliate with tariffs of their own, everyday products could see notable price increases.

Wayne Hampton, a lecturer with three decades of experience in international business and manufacturing, describes Trump’s economic approach as a “zero-sum strategy.” In this framework, there are clear winners and losers, which is problematic in a global context where cooperation is necessary.

“Thinking in zero-sum terms in economics means that one country’s gain comes at the expense of another,” explains Hampton. “In the interconnected global economy, such approaches can lead to conflicts instead of beneficial outcomes for all.”

Ultimately, the burdens of the proposed tariffs will likely fall more heavily on the average American rather than the corporations or trade partners being targeted. Given the current struggles many face to afford basic necessities, there is hope that Trump will be able to negotiate a fair deal.

“I trust that Trump and his economic advisors are aware of the implications,” says Hampton. “However, these tariffs are likely to lead to higher prices just when people are most in need of cost relief. His approach may appear aggressive, but it looks more like a method to spur negotiations.”

Tariffs, Economy, Negotiations