In his inaugural address, President Donald Trump said he would enact tariffs to “enrich our citizens.” This is a promise he has worked to fulfill since taking office, implementing tariffs, ranging from 10% to 145%, on most foreign countries. However, it is unclear if these tariffs will actually benefit American citizens due to the effect they will have on prices and the stock market.
What is a tariff?
A tariff is a tax on imported goods. In theory, this encourages consumers to buy domestically manufactured products. While Trump claims that his tariffs will make Americans wealthier, tariffs usually lead to the opposite. Companies that import goods typically raise their prices in order to offset the cost of the tariff. This means that consumers end up paying more, not foreign countries.
While some tariffs are applied to a specific industry, Trump’s recently enacted tariffs apply to all goods from the country they are applied to (with some exceptions). This means that food, auto, clothing and other products could all see price increases. An example from the Center for American Progress shows that children’s shoes from Vietnam that were previously $52 would cost $75.92 after a 46% tariff. Goods that are bought both online and in stores could experience price increases.
A timeline of the tariffs
The first wave of tariffs came on Feb. 1 when Trump announced 25% tariffs on Mexico and Canada, as well as a 10% tariff on goods from China. The tariffs were a reaction to these countries’ perceived failure to counter drugs, cartels and illegal immigration. Trump paused the tariffs on Mexico and Canada for 30 days, so they went into effect on March 4. The tariffs on China went into effect on Feb. 4, and China responded with tariffs of their own against the U.S.
On Feb. 13, Trump announced he was going to enact “reciprocal tariffs.” He revealed a complete list of these tariffs on April 2, a date Trump dubbed “Liberation Day.” All countries will face a 10% tariff, and the listed countries will have their “reciprocal tariff” added on top of that baseline, aiming to match the tariffs other countries charge the U.S. The way the added reciprocal tariffs were calculated however were based on trade deficits, not actual tariffs, which raised some concern amongst the true purpose of these tariffs.
On April 9, Trump announced that the reciprocal tariffs will be paused for 90 days, though all countries will still be subject to the 10% baseline rate. However, the tariffs on China were increased to 125%, and were raised again on April 10 to 145%. The tariffs on electronics were lifted on April 1, possibly as a reaction to the widespread unease regarding his actions, though the Trump administration later said that the tariffs could return.
On April 23, 2025, twelve Democratic states sued the Trump administration over the tariffs, claiming that the tariffs are unconstitutional. They feel that there is not a current emergency that justifies Trump’s tariffs, so his actions violate Congress’s constitutional right to levy tariffs.
Why did Trump implement the tariffs?
The Trump administration claims that the tariffs are necessary to protect American manufacturing and to lower the trade deficit. A trade deficit is when a country has fewer exports than imports.
“If we just run gigantic trade deficits and sell our soul to the rest of the world, eventually we are going to be the worker for the rest of the world,” said Howard Lutnick, the United States secretary of commerce.
Trump made economic actions, including tariffs, a major focus of his 2024 presidential campaign. For example, he suggested implementing tariffs on cars manufactured in Mexico. He also named specific companies, like GE, that could be targeted by tariffs due to their manufacturing presence in places outside of the US.
“It’s our declaration of economic independence. For years, hard working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense, but now it’s our turn to prosper,” Trump said during a Rose Garden speech on April 2, 2025.
So why do markets seem so uncertain?
When the stock markets (i.e. investment bankers, stock traders, the people from The Wolf of Wall Street) see an increase in tariffs, they also see an increase in prices, which under the principles of supply and demand would cause a negative shift in demand. When markets see that the tariffs are paused, they revert, creating an increase in demand.
Due to the Trump administration flip-flopping on their tariffs, investors and businesses have been left in uncertainty, and CNN’s Fear and Greed index has slumped to its lowest level this year. This unpredictability makes it impossible for companies to reliably plan for the future, leading to delayed investments, hiring freezes and potential layoffs. Instability of this sort can lead to the deterioration of economic growth and investor confidence in the United States.
One way to observe how markets are reacting to economic policies is by looking at index funds. Stock indexes are a collection of stocks, or shares, of the highest valued companies, in one bundle. In theory, index funds indicate general market conditions on average, serving as a good tool to see if the overall economy is growing or shrinking. One major index, the S&P 500, has increased in value about 10% every year since 1957 — since Trump’s inauguration the value of the S&P 500 decreased to a -15% low prior to Trump’s reversal of the “reciprocal” tariffs.
Trump’s proposed tariffs took a lot longer than expected to actually be put in place. In the beginning, because the president went from announcing tariffs a month in advance to pausing them two days later, some investors thought that the tariffs wouldn’t truly be implemented as an economic policy, but instead used as a tactic to force allies like Mexico and Canada into more control at the border.
When the markets first reacted to Trump’s Mexico and Canada tariffs, the main stock indexes on Wall Street tumbled down about 2% at the sign of a potential economic slowdown. Mexico and Canada make up a significant portion of trade to the U.S. — they’re of great mutual importance to one another. Many industries, particularly automotive and agriculture, rely heavily on cross-border supply chains.
At the announcement of Trump’s Liberation Day tariffs, the stock market dropped again — nearly every stock on the New York Stock Exchange was in the red. Economists and bankers on Wall Street warned of increased inflation, and Goldman Sachs released a report signalling that the likelihood of the U.S. entering a recession in the next 12 months increased to 45%, up from an already high estimate of 35%. That’s practically a coin flip on having a good 2025, and a not so good 2025.
How will this affect teens?
Many teens use online shopping apps like Amazon, Shein and Temu among others — many of these applications function by importing Chinese goods like clothes, toys, electronics and more for cheap, and selling them to American consumers for profit. Over 70% of items sold on Amazon are produced in China, and the effects of tariffs on these goods are already being felt by consumers.
On the other hand, apps like Temu and Shein sell primarily Chinese-made goods, and are starting to increase their prices with “import charges” equivalent to the tariff fee. Teens keen on utilizing these apps for cheap goods may have to look elsewhere for their share of fast fashion, cute trinkets and other products. It’s clear that these tariffs serve as an expense for the consumer.
