On Wednesday, April 2, 2025, President Donald J. Trump released a series of tariffs in a fact sheet released by the White House titled “President Donald J. Trump Declares National Emergency to Increase our Competitive Edge, Protect our Sovereignty, and Strengthen our National and Economic Security.”

As a part of this announcement, he declared an across-the-board 10% tariff on all countries, as well as “individualized reciprocal higher” tariffs on countries that the U.S.A. has the largest trade deficits with. The 10% tariff was put into effect on April 5, at 12:01 am, while the reciprocal tariffs are to be put into place on April 9, at 12:01 am. 

According to the sheet, the goal of these tariffs is to “strengthen the international economic position of the United States and protect American workers.” The idea of restricting global trade to aid domestic industry is known as protectionism.

The Corporate Financial Institute explained that “a protectionist trade policy allows the government of a country to promote domestic producers, and thereby boost the domestic production of goods and services by imposing tariffs or otherwise limiting foreign goods and services in the marketplace.” 

They also described the advantages and disadvantages of protectionism: with more jobs and higher GDP as advantages, and with stagnation of technological advancements and an increase in prices from lack of competition as disadvantages.

While it is subject to personal opinion which is more important, stagnation of technological advancements hurts long-term economic growth, which, in turn, hurts the competitive position of the US when it comes to production capacity.

In addition, tariffs can have different effects on consumers depending on the goods they are placed on. Depending on the elasticity of demand of the product, importers are able to pass off some costs onto consumers.

Rodrigo Adão, an associate professor of economics at the University of Chicago Booth School of Business, explained to UChicago news, “If we go back to the trade war in 2018, there is a body of research showing that most of the impact of these tariffs was borne by consumers and firms inside the United States.”

Beyond the textbook understanding of tariffs, it is also important to measure consumer uncertainty since the announcement. The CBOE Volatility Index (VIX) is an index that tracks uncertainty and fear within the stock market, specifically the S&P [Standards & Poor] 500. Numbers above 20 signal uncertainty within the market. 

Since the tariffs were announced, the VIX shot up from around 21 on April 2, to a high of 60 on April 7. The last time there was a spike of this magnitude was right after the outbreak of COVID-19.

Since the nature of tariffs increases prices, the addition of costs being passed off to consumers, the slowing of economic growth and the drop in consumer confidence make their usage in the long term disadvantageous and harmful for the US, its consumers and its firms.