Humans have been trading since ancient times, exchanging goods to meet their needs and desires. Today, international trade remains the backbone of the global economy with countries relying on each other for resources, technology, and consumer goods. When trading one way governments usually tend to deal with trading partners when it comes to disagreement is through Tariffs.

Now what are tariffs? They are taxes imposed on imported or exported goods. Countries, interested in maximizing their exports generally avoid using tariffs for export duties.

Initially, tariffs were designed to protect domestic industries from foreign competition and generate revenue. However, they have increasingly become a weapon in economic and political disputes.

If there’s one person who loves tariffs, it’s Donald Trump. He even called it

“The most beautiful word in the entire dictionary”

"It's more beautiful than love"

"I have stopped wars with tariffs."

Trump has used tariffs as his go-to economic weapon throughout his presidency. We have heard of the recent Tariffs he has imposed on America's 3 biggest trading partners this article will dwell on whether the new tariffs he has imposed will help America's economy to grow like trump states or cause a massive backlash.

Let's first rewind to see the historical relations of US tariffs on these countries.

Historical relations of US Tariffs on Mexico, Canada, and China

USA and China

The trade war between China and the US kicked off on 6 July 2018 with the US imposing 25% tariffs on $34 billion of Chinese imports. Over the next two years, Trump expanded tariffs to cover over $360 billion in Chinese imports, targeting industries like electronics, steel, and consumer goods. China retaliated with tariffs on US agricultural products, hitting American farmers hard.

This regime continued but from 24 September 2018 China was not keeping up with the US who kept on increasing tariffs and China wouldn't retaliate. Then on 14 February 2020 phase one goes into effect where China agreed to buy more US goods in exchange for slight tariff reductions.

Image Credits: Tia Dufour from Wikimedia

However, tensions persisted, especially in technology restrictions on Huawei and semiconductors. This is where things stood before COVID-19 where the share of Chinese imports dropped slightly but after the pandemic, there was a rise in imports from China it had to do with the PPE kit, masks, and other necessary goods during the pandemic. During President Joe Bidens time in office, he continued to maintain Trump's tariff policies despite criticizing them during his campaign. He banned US companies from exporting advanced semiconductors and chip-making tools to China.

USA and Canada

For decades, the US and Canada have been allies; with most tariffs between their two countries removed by the 1994 North American Free Trade Agreement (NAFTA). Then on 16 August 2017, Canada and the US entered a renegotiation of the North American Free Trade Agreement which Donald Trump frequently characterized as the worst trade deal ever made. He threatened to remove the United States if the agreement was not renegotiated to his liking.

This tension continued Trump imposed import tariffs on Canada for steel and aluminium which prompted forceful objurgation from Canadian Prime Minister Justin Trudeau. They responded by imposing taxes on $12.6 billion worth of American goods, such as ketchup, orange juice, and whiskey. Then, when Trump threatened to impose tariffs on Canadian auto exports, a significant trade war broke out that could have destroyed the North American auto industry.

Image Credits: Eurasia Group from Wikimedia

Seeing these ongoing disagreements, they agreed on a new trade agreement that would keep the majority of NAFTA while bringing about some significant changes. At first, only the US and Mexico were parties to this agreement, then under the pressure of being the only odd one out Canada agreed to join. On 30 November 2018, this pact was signed by President Donald Trump, Prime Minister Trudeau, and President Enrique Peña Nieto which created the United States–Mexico–Canada Agreement (USMCA).

From Canada's vantage point, some of the main salient features of this deal include that 75% of a car's components must be produced in North America (up from 62.5% under NAFTA) to qualify for zero tariffs. 40-45% of auto parts must be made by workers earning at least $16 per hour, benefiting US and Canadian workers, Canada also opened up parts of its dairy market to allow more US milk, cheese, and dairy imports which benefited their farmers and No tariffs on digital goods like e-books, music, and software. This agreement came into effect during former President Joe Biden's time in office.

USA and Mexico

Mexico was also part of the North American Free Trade Agreement (NAFTA) making it become a major industrial location for US corporations. Then the US and Mexico entered a renegotiation of NAFTA with Trump threatening to slap an extra 5% tariff on Mexico making it 25% if they did not tackle illegal immigration which Mexico agreed to and the tariffs were not imposed.

Image Credits: Presidencia de la República Mexicana from Wikimedia

August 2018 The United States and Mexico said that they had reached a new trade pact which is the United States–Mexico–Canada Agreement (USMCA) as mentioned above in the USA and Canada section. On 30 November 2018, this pact was signed and came into effect during former President Joe Biden's time in office.

Some salient features from Mexico's perspective include that 75% of a car’s parts must be made in North America (up from 62.5% under NAFTA) to qualify for zero tariffs. 40-45% of auto parts must be made by workers earning at least $16 per hour, benefiting US and Canadian workers but impacting Mexico, they must strengthen labor rights and permit autonomous unions. The United States can penalize Mexican factories that break labor regulations.

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Trump’s Latest Tariffs on Mexico, Canada and China

In his latest move, Trump has imposed a whopping 25% tariff on goods from Canada and Mexico and an additional 10% tariff on imports from China. He says it's to push back against the crimes, drugs, and illegal aliens coming to the US. Trump also argues that tariffs will make America "richer and richer" by bringing jobs and economic growth "At levels never seen before."

Image Credits: Shealeah Craighead from Wikimedia

However, reality paints a different picture. These tariffs will affect American consumers and disrupt industries dependent on imported goods.

Who Pays the Price? The Impact on Consumers and Businesses

Hundreds of billions of dollars worth of imports come from Mexico, Canada, and China. The recent tariffs imposed are of a huge amount and other countries don't put this amount of tariffs on the imports coming in and this will immensely affect consumers and businesses.

Image Credits: Markus Winkler from Pexels

For instance, let's take the example of a major good coming into the US from Mexico which almost all the consumers consume - Avocados, almost 95% of the avocados are produced in Mexico. With a 25% tariff, the price of avocados will soar, making it a luxury for American consumers. Canada is another important commercial partner, providing oil, timber, and essential minerals.

Tariffs on these commodities will raise costs for companies that rely on them, shifting the burden to consumers while also harming Canadian exporters. Then there's China, another big supplier of electronics, machinery, and manufactured products. An additional 10% tariff on Chinese imports raises prices for common items such as cell phones, computers, and household appliances.

While Trump insists that these tariffs will benefit American industries, he has acknowledged that the costs may be passed on to consumers, potentially leading to a spike in inflation.

The Real Victims of the Trade War

The workers, farmers, and producers who produce these products are becoming the primary victims of these trade battles. When tariffs rise, demand for these products falls, resulting in poorer output, further wage cutbacks, and layoffs.

China has developed strategies to mitigate the impact. Rather than facing the brunt of US tariffs, Beijing has transferred business to other countries, such as Cambodia and Southeast Asia, maintaining its global trade dominance while American firms struggle.

Conclusion

Trade wars are frequently waged with promises of economic growth, job creation, and national power, but the reality is considerably more complicated. Tariffs can be an effective instrument for protecting domestic industry and increasing revenue. As every action has an opposite reaction they also come with serious consequences—higher prices, job layoffs, supply chain disruptions, and economic uncertainty.

Trade wars rarely have obvious winners and in an increasingly globalized world, economic conflicts can easily escalate into long-term financial pressure. Hence the focus should shift from increasing tariffs to cooperation, strategic economic policies, and effective negotiations which will lead to long-term benefits rather than short-term victories.