In early February of 2025, President Trump announced the imposition of new tariffs on the European Union (EU), criticizing their trade policies and the way they affect American farmers and carmakers.
A tariff is a tax that a government imposes on imported goods, typically applied to safeguard domestic industries, generate revenues, or serve as a negotiation tool. In the case of the US, Trump has already announced that he will be placing 25% tariffs on goods imported from Canada and Mexico, and 10% on goods from China. With the warning now being that the US may place additional ones on the EU, this begs the question: How does this benefit them?
In general, the US imports more from Europe than it exports, resulting in a trade imbalance or deficit. A trade deficit can be incredibly detrimental to a country for multiple reasons. Firstly, when a country imports more than it exports, the demand for foreign goods rises, which can hurt domestic industries and lead to unemployment issues. Secondly, becoming overly reliant on other nations economically can lead to vulnerability in times of crisis and weaken a country’s position in geopolitical negotiations. Finally, a consistent trade deficit can contribute to a country’s currency becoming depreciated, as there is more of it flowing out to buy foreign goods – this can cause high inflation rates and increased cost of living. Thus, according to Trump, these tariffs will remedy the US’s trade deficit and protect its economy.
These threats have had massive repercussions on many large economies in the world. China’s Ministry of Commerce announced it would be filing a legal complaint to the World Trade Organization, while other countries, such as Canada, have begun imposing tariffs of their own on the US, initiating a “trade war”. A trade war in this context would be incredibly damaging to both sides, creating economic uncertainty, disrupting global supply chains, lowering international trade and raising costs for both businesses and consumers. Trump’s threats have already begun affecting the economy , with major indices such as the Dow Jones or Nasdiq seeing substantial drops, striking the automobile, banking, and technology sectors the hardest. This reveals that investors are already feeling worried and businesses are struggling to adapt.
As of now, the tariffs on China and Canada have been effectively implemented, while the ones on Mexico and the EU have yet to be given an implementation date. However, according to numerous American economists, Trump’s hostile approach is likely to push the country into a recession. This has sparked outrage online, with many Republican voters regretting their choice, expressing their worry for the future of their nation.
Trump’s use of tariffs to rectify the current trade deficit and pressure foreign economies may very well end in a terrible economic situation for the US, with disapproval spreading even among his own supporters.
