WASHINGTON — During his initial presidency, Donald Trump utilized tariffs on international goods; however, their overall economic influence was minimal despite clear effects in certain sectors. Although Trump asserted these tariffs would result in more factory jobs, the data indicates they did not fulfill this promise and did not lead to the expected surge in inflation, which critics had raised concerns about.

Now, Trump’s approach to tariffs appears set to expand significantly, stirring increased uncertainty about his intentions and potential repercussions. Michael Stumo, CEO of the Coalition for a Prosperous America—an organization advocating import taxes to foster domestic manufacturing—remarked, “There will be significantly more tariffs, and he has made that very clear.”

On social media, the president-elect announced plans to implement a 25% tariff on all goods imported from Mexico and Canada on his first day in office, contingent on those nations effectively curbing illegal immigration and the illicit flow of drugs such as fentanyl into the U.S. Such tariffs could jeopardize the North American trade agreement negotiated during Trump’s original term.

Additionally, he indicated that imports from China would incur a 10% tariff until China effectively addresses concerns regarding the production of fentanyl materials. In reaction, Democrats and various industry leaders have voiced apprehension over the risks associated with these tariff threats. Business representatives cautioned that these tariffs could amplify inflation, while Mexican President Claudia Sheinbaum suggested her government might retaliate with tariffs on American exports. House Democrats also proposed legislation aimed at limiting a president’s ability to unilaterally impose such significant tariffs, warning of potential price surges impacting a range of goods from automobiles to groceries.

Sheinbaum mentioned her administration was already developing a list of possible retaliatory tariffs, emphasizing that Mexico would respond proportionally to any imposed by the U.S. Meanwhile, House Democrats introduced a symbolic bill requiring congressional approval for a president to levy tariffs based on national emergency claims, anticipating a power shift to Republican control in Congress.

For Trump, tariffs have become a familiar strategy that appears less politically charged, even as the mandate he received in the recent elections centered around controlling inflation. The tariffs he imposed on China during his first term have persisted into the Biden administration, which even intensified some tariffs and restrictions on the second largest global economy. The Biden administration has considered removing Trump-era tariffs to alleviate inflation but ultimately found such changes unlikely to have a sufficient impact.

While tariffs were a novel and concerning tactic when first introduced in 2017, their overall impact was relatively mild. In 2018, Trump imposed tariffs on solar panels and washing machines, which raised prices in those sectors while coinciding with domestic plant openings. His administration also enacted tariffs on steel and aluminum, and increased duties on China, resulting in a protracted trade conflict with limited progress on promised U.S. export growth.

This trade dispute modified U.S.-China relations, prompting more American companies to seek non-Chinese suppliers. However, economic research indicates that the tariff conflict failed to revitalize manufacturing jobs in affected communities, despite bolstering Trump’s political support within those areas. In 2017, the federal government generated $34.6 billion in customs duties, doubling to $70.8 billion by 2019. Despite such figures appearing substantial, they represent a small fraction—less than 0.3%—of the current U.S. gross domestic product, which is $29.3 trillion.

Trump’s proposed tariffs now could have much broader economic implications if implemented. If such tariffs were imposed on imports from Mexico, Canada, and China, estimates suggest they could generate approximately $266 billion in tax revenues, excluding potential trade disruptions or retaliation. This financial burden would likely translate into increased costs for U.S. families and businesses.

Former officials from the Biden administration expressed concerns that companies might exploit Trump’s proposed tariffs as a pretext to elevate their prices, similar to price increases observed post-Russia’s invasion of Ukraine in 2022. Ultimately, Trump has not clearly articulated what conditions might lead him to reconsider his tariff stance, creating a sense of uncertainty for businesses and countries as they await additional details.

Greg Daco, chief U.S. economist at EY-Parthenon, summarized the prevailing sentiment: “While we understand the key economic policy priorities of the incoming Trump administration, the specifics on how and when they will be addressed remain unclear.”