On February 1, President Donald Trump imposed tariffs on the United States' largest trading partners: Canada, China, and Mexico.

While economists project these tariffs will generate roughly $100 billion in extra federal revenue each year, they also have the ability to put tremendous burdens on the economy overall.

Disrupted global supply chains, increased business expenses, hundreds of thousands of lost jobs, and increased prices for consumers are all possible outcomes.

Here's a closer look:

Trump's Tariff Measures

Under IEEPA:

President Trump issued three executive orders on February 1, 2025, under the International Emergency Economic Powers Act (IIEPA). The orders imposed a 25% tariff on Mexican and Canadian products and a 10% tariff on Chinese imports, all of which took effect on February 4.

China: All Chinese imports began being charged 10% tariff starting February 4, 2025. Next, on February 27, Trump announced an additional 10% tariff on Chinese goods from March 4. Concurrently, suspension of the preferential treatment for Chinese imports of low value was lifted.

Canada: Tariffs on Canadian imports were postponed for 30 days, effective March 4. Automobile import tariffs were suspended on March 5 until April 2; on March 6, USMCA-covered goods (approximately 38% of Canadian imports) were exempted through April 2, while tariffs on non-USMCA potash—a critical agricultural fertilizer—were cut to 10%. On March 11, Trump signaled doubling the 25% tariffs on steel and aluminum to 50% as retaliation against Canadian retaliation, though this policy was later retracted.

Mexico: Similarly, Mexican imports were also suspended for 30 days and came into effect on March 4. On March 5, vehicle tariffs were suspended until April 2; on March 6, USMCA product tariffs (approximately 49% of Mexican imports) were suspended until April 2.

Retaliatory Measures

China and Canada responded to the IEEPA tariffs, and Canada and the European Union (EU) responded to the steel and aluminum tariffs:

China: China imposed retaliatory tariffs of 10% and 15% on about $13.9 billion worth of American exports on February 10. On March 4, further retaliations were announced—in the form of 15% duty on $2.9 billion of American agricultural exports and 10% duty on $16.6 billion of American agricultural exports from March 10.

Canada: Canada put a 25% retaliatory tariff on $20.8 billion worth of U.S. exports on March 4 and planned to put these tariffs on another $86.7 billion worth of U.S. imports on March 23 as a retaliation to the IEEPA measures.

The EU: The EU hit almost $28 billion of imports of U.S. steel and aluminum with retaliatory tariffs under Clause 232. The first round was to target $8 billion of exports of the United States on April 1, with the rest starting on April 13. However, on March 20, the EU pushed the first round back so that all retaliatory tariffs would begin on April 13. Some of the targeted products include famous American brands like Harley-Davidson motorcycles, jeans made from denim, and bourbon whiskey.

Potential Economic Impact

It is widely acknowledged by economists that free trade increases economic output and income and that trade restrictions decrease them.

There is historical evidence that indicates tariffs increase prices and lower the amount of goods and services supplied to U.S. consumers and businesses, resulting in lower incomes, lost jobs, and lower economic output.

Tariffs can lower U.S. output through various channels:

Higher Expenses Transferred to Manufacturers and Consumers: Tariffs increase the price of imported raw materials and inputs, increasing the cost of final products. This, in turn, lowers the consumers' and manufacturers' disposable income.

Reduced Investment and Labor Input:

If higher prices lower the return on capital and labor, investors and laborers can reduce efforts and outlays, further lowering economic activity.

Currency Appreciation:

Tariffs can lead to a stronger dollar that is able to offset domestic price increases, yet a greater proportion of the dollar makes U.S. exports less competitive overseas and lower exporters' income as well.

Tariffs have already been linked with higher prices, reduced economic output, and layoffs across the United States since the onset of the trade war in 2018.

Effects on Canada, Mexico, and China

Mexico: Over 80% of Mexican imports (automobiles, machinery, fruits and vegetables, and medical equipment) are exported to the U.S., representing 15% of U.S. imports. $200 billion in exports per year in electronics and transportation equipment would lower Mexico's GDP by up to 16% via a 25% unilateral tariff, with Mexico's auto industry hit particularly hard (as many as 80% of Mexico-made cars are exported to the U.S., approximately 2.5 million annually).

Canada: The U.S. purchases over 70% of Canadian exports, accounting for 14% of U.S. imports. Under the new tariff regime, Canada’s energy sector is expected to suffer the most.

China: China’s dependency on U.S. trade is relatively lower. Over the past two decades, as Beijing has bolstered domestic production, the trade-to-GDP ratio has dropped from over 60% in the early 2000s to around 37% today.

Impact on Global Supply Chains

In Trump 2.0, the "China +1" model will pick up even greater momentum. Increasing numbers of Asian companies are opening up capacity in countries like Vietnam, Indonesia, Malaysia, and Thailand.

To give one example, Penang in Malaysia is already experiencing a semiconductor boom fueled by growing domestic supply chains.

This revolution of global trade highlights the use of real-time shipping data to monitor supply chain change, with companies adapting their import export model in a fast-changing world of global trade.

Why You Should Care

For traders, exporters, and importers, diversifying the supply chain to reduce risks from trade wars is a necessity. Here are some important strategies:

Use Big Data to Find Alternative Suppliers

By analyzing shipping records and import export data, companies can spot emerging trends and spot potential new sources of supply. This streamlined supply chain management not only reduces risk but also builds resiliency. With end-to-end data, firms are able to analyze alternative suppliers and ensure they are not overly dependent on a single source, with operations in a steady state even if there are disruptions.

Expand Sales Targets to New Regions

In today's volatile trade scenario, robust import export data is the key to steer through uncertainty in global trade. Analysis of shipping data in a timely manner helps in forecasting demand and decision-making. Businesses can diversify their markets and spread risk across geographies by identifying similar product demand in lower-risk geographies.

Utilize Company-Level Import Export Data

With the volatility of markets, company-specific import export information is priceless. Combining proper shipping information with these results helps companies visualize market trends and hazards and adjust plans for production and distribution promptly in order to guarantee supply chain continuity.

Conclusion

Trump's new tariff policies will fundamentally revolutionize global trade and supply chain management. While the tariffs might raise federal income, they can also lead to disrupting world trade systems, increasing expenses, and reducing jobs.

Exporters and importers ought to leverage timely shipping statistics and combined import export expertise to provide diversified supply chains, find alternative suppliers, and investigate emerging markets.

In an increasingly unstable trade environment, being clever with data-driven solutions is what it requires to protect your business from supply chain disruption and enable enduring expansion.

Start with this supply chain intelligence platform (free) to find suppliers/buyers in your niche from today.

TradeMagellan Blog

Why Subscribe to Trade Transactional Data Intelligence?