Economic Crossroads: Are Tariffs Ending North American Relations?
Economic Policy Brief #86 | Saiabhiram Akkaraju | May 28, 2025
Since his re-election in 2024, President Donald Trump has reignited a trade war strategy similar to his first term, escalating tariffs against China, Mexico, and the European Union. These tariffs, framed as efforts to “protect American jobs,” have significantly raised the cost of imported goods such as electronics, food, clothing, and raw materials. While intended to support domestic industries, the policy has instead imposed hidden costs on American consumers—especially those from lower-income and marginalized communities.
Contrary to popular belief, tariffs are not paid by foreign exporters. They are effectively a tax paid by U.S. importers, who typically pass the increased cost on to American consumers in the form of higher prices. This economic structure means that the burden of tariffs is shouldered domestically, often by those who can least afford the added expense.
Analysis
The 2024–2025 tariff escalation represents a continuation—and intensification—of Trump’s earlier trade policies. However, the focus has shifted toward even broader categories of goods, now encompassing essentials like groceries, school supplies, construction materials, and medical equipment. The economic consequence is a rise in prices for basic necessities, with particularly harsh impacts on Black, Latino, Indigenous, and low-income households, who spend a larger share of their income on these goods.
In response, key U.S. trading partners have imposed retaliatory tariffs—taxes on U.S. exports designed to mirror or punish U.S. trade actions. For example, China has targeted American agricultural products, and the EU has increased tariffs on U.S. machinery and vehicles. These countermeasures have caused sharp declines in export demand, hurting U.S. farmers, manufacturers, and small business owners. The resulting farm bankruptcies, job losses in manufacturing hubs, and shrinking revenues in export-dependent sectors have rippled through many communities—especially rural areas and small towns that are economically vulnerable.
Additionally, minority-owned businesses are experiencing disproportionate hardship. These businesses often operate on thinner profit margins and rely heavily on imported goods and materials. Rising costs make it harder for these entrepreneurs to compete, grow, or even survive. Many have been forced to raise prices, reduce services, or shut down altogether.
While the stated goal of the tariffs is to incentivize domestic production, the short-term result has been increased financial pressure on American consumers and small businesses, without sufficient domestic supply chains ready to absorb demand. Economists from institutions such as the Brookings Institution, Economic Policy Institute, and Tax Foundation have repeatedly shown that such policies, absent comprehensive supply chain investments, increase inequality and economic hardship among working-class Americans.
Engagement Resources
- Economic Policy Institute (EPI)
Researches the economic effects of trade policies and advocates for policies that uplift working-class and marginalized communities.
https://www.epi.org - Brookings Institution – Metropolitan Policy Program
Provides current data and analysis on the impacts of tariffs on urban, minority, and low-income communities across America.
https://www.brookings.edu/program/metropolitan-policy-program/ - Prosperity Now
Focuses on economic equity and building wealth for low-income communities and communities of color, addressing the fallout of harmful economic policies like tariffs.
https://prosperitynow.org