On April 2, 2025, President Donald Trump declared that foreign trade and economic practices had created a national emergency. His response to this crisis was the implementation of tariffs with countries like China, Canada, Mexico, and members of the European Union. According to the White House, this was an attempt to protect workers in America and position the United States as a global power, reprioritizing domestic manufacturing and combating trade imbalances (The White House).

This tariff had major consequences nationwide: the cost of living has spiked for the average American, most international companies have been forced to relocate their supply chain, and relationships between nations have been destabilized. In fact, the American tariffs on Chinese imports have reached a soaring 145 percent, and the retaliatory duties 125 percent. Recently, though, these tariffs have been reset by a reciprocal 115 percent reduction of tariffs (Yahoo Finance). This is a 90-day pause that was settled upon, and it was noted to have the potential for extension. Despite this temporary reconciling halt in the trade war between the two nations, Trump’s tariffs continue to have a large-scale impact across the country. To examine this critical issue, I have interviewed Economic Club co-head, Misha Varlamov ’26, to discuss this recent tariff and this strategy in the wider economic view.

To ensure clarity in our discussion, I asked Misha to briefly explain the basics of Trump’s tariff plans. He first defined “tariff” as the tax on imports, usually intending to discourage foreign countries from exporting to the U.S. This leads to a surplus in the current account, where there are more exports than imports, and theoretically encourages domestic investment. This aligns with the goals of Trump’s administration and, historically, right-wing political ideology. From his perspective, Misha foresees that Trump’s tariffs could potentially increase the value of the U.S. dollar, which is currently depreciating. However, since tariffs increase taxes, there may be a decrease in consumer confidence in the long run.

Misha explains that there are two fundamental ways to grow the economy: raising the working population or developing domestic technology. With tariffs, Trump seems to turn to the technology side of economic development by reducing the dependence of the U.S. on external supplies for technological practices and encouraging domestic improvements. He does not agree with this approach. As a geopolitical tool, a tariff naturally puts political relations at risk. Additionally, this specific tariff has detrimentally affected the stock market. This method prevents the U.S. economy from being influenced by other countries. While Misha values the balance between exports and self-dependence, he believes that the economy is built on influence.

Many economists share this view, agreeing that trade is beneficial to the economy because it contributes to global efficiency. Through trade, capital and labor are distributed in ways that they are used more efficiently, helping societies gain a better economic welfare (International Monetary Fund). Misha explained this in simpler words: “No one is the best at everything…trade is sacrificing one thing for another to make up for this imbalance.” Tariff is a concept that contradicts these values, which is why it is frequently disagreed upon. Economists also agree that ideally, a country should have a surplus of capital account (the net flow of investment) and a deficit in the current account (a country’s financial transactions with other countries). This is also contrary to the current state of the U.S., where, due to the tariffs, there is more export than import.

Tariffs not only work against some of the ideals in economics, but can also be contradictory in itself. In a related conversation, Benson Xie ’25 describes tariffs to pose a vicious cycle, where its purpose can counteract its reality. Although political leaders tend to implement tariffs to open opportunities for domestic workers, tariffs discourage international trade. As a result, costs for businesses raise and ultimately undermine these opportunities.

Misha concluded our conversation with an optimistic thought: one may expect resilience in the economy. Regardless of whether the current circumstances are favorable or adverse, the business cycle eventually recovers. We cannot predict the future; what remains in our power, though, is believing in the tenacity of our economy. This optimism extends to the broader development of society around us, and upholding the belief that, in the end, all will be well.

Questions for interview - with Econ Club

About this specific tariff:

Can you briefly explain the basics of Trump’s 2025 tariff plan?

Tariff = tax on imports → less motive for other countries to export → surplus into the current account (more export more import) + encourage domestic investment

Right-wing politics → Trump = historically, they encourage domestic involvement

(in contrast to democrats)

How do you foresee these tariffs affecting U.S. consumers in the short and long term?

short term to raise value of the dollar, even rn its depreciating

(Right now: going into recession based on his other policies, inflation bc he wants to increase government spending vs private investment is down a lot)

But the government is not to borrow too much…

→ Long term = taxes increase, people don’t want to spend, consumer confidence goes down

→ to grow economy: increase population or technology (Trump’s strategy: to start with tariffs to increase domestic improvement → create technology)

Personally, do you agree with Trump’s approach to trade? Why or why not?

Don't agree…

Two diff ways: population (Left wing) or technology (Trump)

Sacrificing a lot: stock market crazy dip (will recover, domestic firm start producing technology)

Wider economic view

Tariffs in general:

How do economists generally view tariffs? Why is it often disagreed upon?

Economists: trade is a good thing = growth (no one is the best at everything…sacrificing one thing for another)

The general consensus = capital account (finance) is surplus, current account (import) is in deficit, which is contrary to the more export less import right now

What are some risks and benefits of using tariffs as a geopolitical tool?

Risking = political relations

Benefit = bring value to domestic investment/domestic efforts to grow the economy = self-dependence

He doesn’t want US economy to be influenced by other countries…but he thinks economy is built on influence

Do you have any ideas as to alternatives to tariffs that might achieve similar goals?

Increasing human capital = bring in more people

There is no alternative to it…

With that said, do you think it is an effective way to protect domestic industries? Should tariffs be more widely implemented or avoided?

Depends on what leaders are trying to achieve

Encouraging trade is better than discouraging it…

from a consumer standpoint: you want to buy international goods for cheaper…

But for firms…

They manufacture their intermediate goods in other countries → raise prices, cut the wages

Add:

Economy: if something bad/good happens, the business cycle always recovers no matter what

No one can predict the future → protests, but in the end, the economy will

Benson:

Tariffs is a vicious cycle of opening and closing