Since taking office, President Donald Trump has imposed significant tariffs on major US trading partners—including Canada, Mexico, and China—alleging national security concerns such as illegal immigration and the fentanyl crisis. The unpredictable nature of these tariffs has created great uncertainty for American industries, the stock market, and consumers alike. And now, National Economic Council Director Kevin Hassett, Trump’s top economic aide, is admitting that “some uncertainty” lies ahead as the administration’s tariff policies continue to evolve.

American University Professor of Economics Robert A. Blecker says that the Trump administration tariffs—both the ones already imposed and his threats to impose more—will be disastrous for the US economy, while hurting most American consumers and businesses. We asked him to explain how these tariffs will impact the economy and trickle down to affect the lives of ordinary Americans.  

PH: Let’s start at the beginning. Are there times when tariffs are a good thing?

RB: Tariffs can be a useful tool in an economic development strategy when used in a strategic way to target particular industries that are essential for a country’s future. This was the case for the tariffs on Chinese EVs under President Joe Biden, which were accompanied by other policies to promote the production and adoption of EVs in the United States. But there is nothing strategic in Trump’s constant volley of tariffs (actual and threatened) on a huge range of imports from most of the country’s largest trading partners.

PH: Can you explain the realities of the current tariff situation and probable outcomes for ordinary Americans?

RB: The on-again, off-again tariffs on Canada and Mexico are particularly egregious, because they are contingent on dubious political objectives (inducing both countries to stop cross-border flows of migrants and immigrants). Such tariffs won’t boost domestic production, because US producers will not invest more or hire more workers in an atmosphere of great uncertainty where they don’t know whether the tariffs will be in effect or not. 

American consumers depend on goods imported from both countries, ranging from fruits and vegetables to automobiles and televisions, all of which would become significantly more expensive if the tariffs are imposed. Because Canada and Mexico are the two largest national markets for US exports, their retaliatory tariffs will devastate US industries ranging from alcoholic beverages to motorcycles and machinery.  

The tariffs on steel and aluminum make no sense. A century ago, such “basic” industries could have been considered strategic for a country’s industrialization, but that is no longer the case. Instead, twenty-first-century production is characterized by complex global supply chains, in which intermediate inputs like steel and aluminum are vital for “downstream” firms in sectors like automobiles and aerospace, as well as for many consumer goods (beer cans and patio furniture, for example). If these materials become more expensive, it raises costs for downstream firms and forces them to raise prices for consumers. Far more jobs will be lost than gained.

Only a narrow range of steel and aluminum producers, who account for a small share of US manufacturing employment, can benefit from tariffs on these goods. The steel and aluminum tariffs are also inviting more retaliation from major US export destinations, like the European Union, which will hurt more workers and firms in the United States. 

PH: What are some of the reasons why the new administration is so pro-tariff? And are they legitimate?  

RB: Trump’s obsession with tariffs seem to stem from a combination of deeply held protectionist views and the opportunistic realization that certain US laws give him unbridled power to impose tariffs without consent of Congress. The administration is justifying most of the new tariffs under special exceptions for national security threats or national emergency situations, which were never intended for the way Trump is applying them. 

One can hardly claim that the negligible inflows of fentanyl and migrants from Canada qualify as a national emergency, or that national security in the twenty-first century requires greater domestic steel and aluminum capacity (as distinct from, for example, more scientific research and computer chip production)—especially when most steel and aluminum imports come from friendly, allied countries. 

Yet these claims are being used as the legal rationale for the tariffs, and those US laws give the president complete discretion to decide what constitutes a national emergency or security menace. Trump’s invocation of national security laws that were written for other purposes (for example, allowing a president to prohibit exports of high technology goods to enemy countries) breaks established norms, insults long-standing US allies, and disregards the intent of Congress.

Other countries rightly insist that Trump’s tariffs violate US trade agreements, and Americans need to be deeply concerned about a president who does not uphold US international commitments. The reimposition of steel and aluminum tariffs on Canada and Mexico and the other threatened tariffs on these countries are clear violations of the United States–Canada–Mexico Agreement (USMCA), which Trump himself signed in 2020 after calling it “the best and most important trade deal ever made by the USA.” It is not clear why any country would want to make a “deal” with a US president who won’t honor his own past agreements.

PH: How will this look in the end?  

RB: In the end, a trade war has many losers and few winners. Trump’s more modest tariffs in his first term, most of which were targeted on China, did not bring net gains to US workers, as the jobs created in the protected industries were offset by jobs lost in downstream sectors and because of retaliatory foreign tariffs. The higher and broader tariffs Trump is imposing in his second term will cause far more pain than gain for American workers and consumers and could well bring on a recession or extended economic slump.     

About Professor Robert A. Blecker

Robert A. Blecker is a Professor of Economics in the College of Arts and Sciences, Affiliated Faculty of AU’s School of International Service and Center for Latin American and Latino Studies, and a Fellow of the Forum for Macroeconomics and Macroeconomic Policy. His most recent book (co-authored with Mark Setterfield) is Heterodox Macroeconomics: Models of Demand, Distribution and Growth; he was also the co-author of Fundamentals of U.S. Foreign Trade Policy: Economics, Politics, Laws, and Issues (with Stephen D. Cohen and Peter D. Whitney). Professor Blecker is a widely published author of peer-reviewed research on international trade policy, open economy macroeconomics, post-Keynesian economic theory, the Mexican economy, and North American economic integration. He is a member of the editorial advisory boards of several refereed economics journals. He has lectured at universities, conferences, and research institutes in Argentina, Brazil, Canada, Chile, Colombia, France, Germany, Italy, Republic of Korea, Mexico, Peru, and the United Kingdom.

The opinions expressed in this interview are the author’s own and do not necessarily reflect those of American University.