Daniel Bunn President and CEO at Tax Foundation | Twitter Website
President Donald Trump has announced an increase in tariffs on Canada, Mexico, and China. Additionally, national security tariffs on steel and aluminum imports from all US trading partners, including the European Union, have been reimposed. This move mirrors actions taken during the previous trade war when US trading partners retaliated against American tariffs by targeting key exports such as agricultural products and iconic goods like Harley Davidson motorcycles and Levi’s blue jeans.
In 2025, similar retaliatory measures are expected as trading partners have already announced tariffs affecting $190 billion of US exports. These include agriculture products and American whiskey.
During the first trade war, agriculture exports like soybeans and pork faced significant challenges due to retaliatory tariffs from China. The result was a loss exceeding $27 billion in export revenue between 2018 and 2019. The USDA estimates that China was responsible for 95 percent of these losses.
To mitigate these impacts, the US government provided $28 billion in direct payments to affected producers over two years.
American whiskey exports also suffered due to a 25 percent tariff imposed by the EU (including the UK at that time). This tariff remained until agreements were reached in early 2022. Before these tariffs were enacted, whiskey exports to the EU and UK amounted to $702 million in 2018 but saw a substantial decline thereafter.
The ongoing situation indicates further harm to US exporters. Retaliation from China includes tariffs ranging from 10 percent to 15 percent on various US goods effective February and March. Canada has imposed or planned multiple rounds of tariffs up to 25 percent on billions worth of US exports. Meanwhile, the European Union is set to reinstate suspended tariffs with rates reaching up to 50 percent starting April.
This cycle of retaliation highlights how trade wars can lead to increased costs for exporters without necessarily boosting competitiveness globally.
