WASHINGTON — President-elect Donald Trump has outlined what he believes to be a universal remedy for America’s challenges: imposing significant new tariffs on foreign imports entering the United States.

Trump stirred considerable controversy recently by announcing plans to impose ambitious tariffs on goods from Mexico, Canada, and China as part of his agenda to combat illegal immigration and drug trafficking as he prepares to assume office.

In a series of posts on his Truth Social account, Trump expressed concerns over illegal immigration, despite recent data indicating that border apprehensions have been at four-year lows. He specified that, upon taking office, he would implement a 25% tariff on all imports from Canada and Mexico, along with a 10% tariff on Chinese products, as one of his first executive directives.

He insisted that these tariffs would remain in effect “until Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

According to the president-elect, these tariffs — essentially taxes on imports — would stimulate job growth in manufacturing, reduce the federal budget deficit, lower food prices, and enable subsidies for childcare.

However, many economists express skepticism, viewing tariffs as a largely ineffective means for governments to generate revenue. Notably, Carl B. Weinberg and Rubeela Farooqi from High Frequency Economics voiced concerns that essential sectors such as energy, automobiles, and food supplies could be severely impacted.

They warned, “Imposing tariffs on trade flows into the United States without first preparing alternative sources for the goods and services affected will raise the price of imported items at once. Since many of these goods are consumer goods, households will be made poorer.”

High Frequency Economics posits that the president’s tariff threats are not necessarily aimed at establishing new trade policies, but appear more as tactics to prompt changes concerning imports from Mexico, Canada, and China.

Even though Vice President Kamala Harris labeled Trump’s proposals as insincere during her unsuccessful presidential campaign, the current Biden-Harris administration has maintained tariffs on $360 billion worth of Chinese goods and enacted a 100% tariff on Chinese electric vehicles.

In recent years, the United States has gradually diminished its post-World War II role in advocating for global free trade, a strategic shift largely attributed to the nation’s dwindling manufacturing jobs, often blamed on unregulated trade practices and an assertive China.

Tariffs function as a tax on imports, typically calculated as a percentage of the purchase price paid to foreign sellers. In the U.S., these tariffs are collected by Customs and Border Protection agents stationed at 328 entry points across the nation.

The rates vary, with passenger cars facing a 2.5% tariff and golf shoes a 6% tariff. Tariff rates can be reduced for countries with which the U.S. has free trade agreements, such as the predominantly tariff-free trade arrangement among the U.S., Mexico, and Canada facilitated by Trump’s US-Mexico-Canada trade agreement.

It is often misunderstood who bears the cost of tariffs. Trump maintains that foreign countries pay them, but in reality, it is American businesses that are responsible for the tariffs, which then shift the additional costs onto consumers through increased prices. This economic maneuvering often leaves consumers to bear the financial burden associated with tariffs.

Nonetheless, tariffs can create challenges for foreign economies by raising their goods’ prices and complicating their market viability in the U.S. Yang Zhou, an economist from Shanghai’s Fudan University, concluded in a study that Trump’s tariffs on Chinese imports caused over three times the economic damage for China compared to the United States.

Tariffs are primarily aimed at shielding domestic industries by increasing the cost of imports. They can also penalize foreign nations for unfair trade practices, including subsidizing exports and providing goods at unreasonably low prices.

Before the establishment of the federal income tax in 1913, tariffs were a crucial source of government revenue. Between 1790 and 1860, they constituted about 90% of federal revenue, according to economist Douglas Irwin from Dartmouth College, who has researched trade policy history.

As global trade expanded following World War II, alternative revenue sources became necessary for government operations, leading to a decline in reliance on tariffs. For the fiscal year ending September 30, the government is projected to collect $81.4 billion from tariffs and fees, a modest sum compared to the expected $2.5 trillion from individual income taxes and $1.7 trillion from Social Security and Medicare taxes.

Nevertheless, Trump advocates for a fiscal policy reminiscent of the 19th century. He has contended that tariffs on agricultural imports could lower food prices by benefiting American farmers. However, in reality, tariffs on food imports would likely escalate grocery prices by diminishing market options for consumers and curtailing competition for domestic producers.

Tariffs can also serve as leverage in diplomatic negotiations unrelated to trade. For instance, in 2019, Trump threatened tariffs to compel Mexico to act against surging Central American migrant movements through its territory toward the United States.

Trump has even envisioned tariffs as a means to avert wars, claiming that he could halt conflicts with a mere phone call, threatening countries with 100% tariffs to dissuade them from engaging in hostilities.

Economists generally view tariffs as counterproductive, as they escalate costs for businesses and consumers dependent on imports, while often initiating retaliatory measures. For instance, the European Union responded to Trump’s steel and aluminum tariffs with increased taxes on American products, ranging from bourbon to Harley-Davidson motorcycles, while China retaliated with tariffs on U.S. goods, including soybeans and pork, targeting Trump’s support base in agricultural regions.

Research conducted by economists at several prestigious institutions, including MIT and Harvard, indicated that Trump’s tariffs failed to restore employment levels in American regions that were supposed to benefit from them. Their findings suggested those tariffs “neither raised nor lowered U.S. employment” in these areas.

Despite Trump’s 2018 steel tariffs showing little impact on job numbers, with employment at U.S. steel plants hovering around 140,000, Walmart alone employs a staggering 1.6 million staff members in the U.S.

Further, the retaliatory taxes from China and other countries on U.S. exports led to negative employment repercussions, particularly in farm sectors, although some of these losses were partially mitigated by government assistance. Moreover, the Tariffs also adversely affected businesses dependent on imported goods.

While Trump’s trade war may have faltered on economic grounds, politically, it appeared to resonate, as support for Trump and Republican congressional candidates increased in areas most affected by the import tariffs, particularly in the industrial Midwest and manufacturing-centered Southern states like North Carolina and Tennessee.