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Trump's tariffs push US rates to multi-decade high
One year after US President Donald Trump launched sweeping trade restrictions, average American tariff rates have quadrupled to nearly 10%, the highest level in decades. The policy shift, initiated in April 2025, aimed to revive domestic manufacturing and expand market access but triggered widespread economic ripple effects.
US-China trade plummets amid escalating duties
Trump's Liberation Day announcement imposed a baseline 10% tariff on numerous foreign goods, with some Chinese products facing duties exceeding 100%. Beijing retaliated swiftly, causing bilateral trade to stall temporarily before settling into a prolonged decline. By the end of 2025, US imports from China had fallen by 30%, while American exports to China dropped over 25%.
Chinese goods now account for less than 10% of total US imports, a share last seen in 2000. Dartmouth University professor Davin Chor noted the decoupling reflects long-term corporate strategies rather than short-term policy shifts. "The break will persist even if aggressive tariffs aren't reinstated," he said.
Global trade networks reroute as firms seek alternatives
Despite the tariffs, overall US imports grew 4% in 2025, though at a slower pace than the previous year. The measures prompted businesses worldwide to diversify supply chains, redirecting shipments away from the US. Vietnam and Mexico saw increased imports from American buyers, partly due to expanded Chinese investments in those countries.
Even close allies like the UK, facing a modest 10% tariff, reduced reliance on the US market. While America remained Britain's top export destination, its share of UK goods declined as European nations like Germany and France gained ground. "Global trade has held up, but the wiring has changed," said Alston University economist Jun Du.
Allies resist US unilateralism, straining diplomatic ties
Trump's approach alienated traditional partners, complicating broader policy coordination. Canada, despite exemptions under a North American trade pact, slashed tariffs on Chinese electric vehicles from 100% to 6.1%, a move that unsettled American automakers. Columbia Law School professor Petros Mavroidis attributed the friction to Washington's unilateral tactics. "Unilateralism undermines soft power," he said, citing reduced Canadian tourism to the US-down 20% in 2025-and stalled cooperation on issues like Iran and digital trade.
Economic fallout: higher prices, mixed growth
Domestically, the tariffs contributed to inflation, adding roughly 0.5 percentage points to the 2025 rate, which reached 3%. Goldman Sachs estimated that 55% of the new duties were passed on to consumers. Despite this, the US economy grew 2.1% for the year, with unemployment at 4.4% in December.
Manufacturing, however, contracted for much of 2025, and foreign investment declined. In February, the Supreme Court invalidated the Liberation Day tariffs, forcing the US to repay over half of the $260 billion collected. The White House pledged to revive the policies using alternative legal avenues but has yet to detail its strategy.
"The noise hasn't translated into major macroeconomic damage, but the long-term risks-like retaliatory protectionism-could spread harm," warned Michael Pearce of Oxford Economics.
Political and economic uncertainty ahead
With midterm elections approaching, Republicans face voter concerns over affordability, while the White House insists the policies will eventually yield benefits. Tax Foundation analyst Erica York doubted a return to Liberation Day-level tariffs but noted the administration's next steps remain unclear.
