President Trump on February 10, 2025 issued a 25% tariff on all imports of aluminum and steel, with no exceptions or exemptions.
This comes after President Trump issued three executive orders on February 1, 2025, directing the U.S to place new tariffs on imports from Canada, Mexico, and China beginning on February 4. The tariffs will be a 25% increase on Canada and Mexico, and will apply to all imports apart from Canadian energy resources.
However, after a negotiation with the Mexican president and the Canadian prime minister the tariffs were delayed until March 1. The tariffs imposed on China will be a 10% increase.
With the multitude of tariffs potentially going into place over the next few months, it’s important to understand exactly what a tariff is, what’s the point of them, and what the outlook is like for American industries and American people.
A misconception about tariffs is that they are like sales income or property taxes. However, this isn’t the case.
“Tariffs are like a tax on things coming in the United States from other countries,” said economics teacher Christine Kruger.
While sales income and property taxes are on the individual person, a tariff is a tax directly on the price of imported goods.
Kruger explains there are three main reasons for imposing tariffs: protectionism, source of revenue, or as a negotiation tool.
“If you have an industry that is just starting, like an infant industry, or you have a strong industry, but maybe they’re being undercut by a foreign competitor, whether it’s quality or pricing, then a tariff on that foreign competitor could make it so that their price would be higher,” said Kruger.
When it comes to imposing tariffs as a source of revenue, Kruger described how tariffs had once been a major way to generate income for the federal government.
“Tariffs were a major source between 1798 and 1913, they were anywhere from 50 to 90% of federal income. It was a huge way to generate resources and money” said Kruger.
She also explained how tariff’s can be used to negotiate such as the border between Mexico and the United States. The tariff against Mexico could be used to come to an agreement to increase border security.
But what is the outlook for the American populace and American industries?
It’s important to note there will likely be industries that are affected by these tariffs including the auto industry and canned goods manufacturers.
This is because the U.S. imported over 3.5 million light vehicles from Canada and Mexico in 2024, constituting 15% of U.S. light vehicle imports. With a tariff in place against all importations from these countries, the cost of manufacturing cars and importing cars will substantially increase.
“There is no question that tariffs at 25% level from Canada and Mexico, if they’re protracted, would have a huge impact on our industry with billions of dollars of industry profits wiped out and adverse effect on the U.S. jobs as well as the entire value system in our industry,” said Ford Motor Company CEO Jim Farley in an interview with CBS News.
This has led to many manufacturers in the auto industry to brace for possible effects of the tariffs.
Duncan Angove, CEO of digital supply-chain company Blue Yonder, told CBS MoneyWatch he expects U.S automakers to increase investments in automation and artificial intelligence to cut down on production costs because of the tariffs. He also agreed with Farley, noting the tariffs will either reduce companies’ profit margins or result in higher prices for consumers.
In terms of the effects of a tariff on aluminum, people could see increases in the price of canned goods.
“A concern would be that if it’s more expensive to make the product, then the product will increase in price then,” said Kruger.
But, Kruger also highlighted that when Trump first administered a tariff on aluminum in 2018, canned goods were an exemption. It hasn’t been said whether that exemption will be put in place now.
It is important to mention the tariffs could also have positive effects. The tariffs encourage creating the goods in the U.S. which leads to a positive effect on the stock market. For example, when the tariff of 25% on metals was announced, shares of US steel jumped as much as 6%.
“The trade taxes are a double win for local steel producers. It limits foreign companies’ ability to flood the market with lower priced steel while also giving US companies the ability to raise their prices” said Kruger.
This goes back to the idea of using tariffs as a way to protect a market, in this case U.S. steel. Kruger wants people to stay calm and evaluate the tariff through all angles.
“I would just encourage everyone to look at the pros and the cons, … instead of somebody’s talking points, or TikTok or blog,” she said. “Look at the information and decide for yourself.”
Ultimately, the effects of President Trump’s tariffs on Americans could go either way.
“We have no idea what the overall impacts would be,” Kruger said, “All we can do is work from assumptions of what’s happened before and economics as a whole.”
