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Dow Jones NewsApr 11, 5:50 PM UTC
DJ What to Know About Trump's Latest Tariffs -- 4th Update
By Chao Deng
Even as President Trump hits the brakes on tariffs on many countries, his duties on China and a few major sectors promises a global economic shake-up not seen in decades.
Trump's second-term tariffs on China now total 145%, while China's tariffs on U.S. goods will rise to 125% on Saturday, April 12. The duties sit on top ones that the two countries imposed on each other previously, including during Trump's first term.
On-and-off tariffs as well as the prospect of Trump imposing more has roiled the U.S. stock and Treasury markets, and sent the dollar plummeting.
Trump argues that the duties will resuscitate U.S. manufacturing, cut the U.S. trade deficit and help reduce the national debt. Detractors say the tariffs could upend global trade and lead to higher inflation.
Here's what to know:
What tariffs did Trump impose?
Trump imposed a universal 10% tariff for less than a day, before announcing a 90-day pause. That same day, he upped his tariffs on China. The 145% duties come on top of tariffs that Trump imposed in his firm term as well as ones that former President Joe Biden imposed.
Earlier in the year, tariffs of 10-25% on many goods from Canada and Mexico went into effect. Some goods became duty-free again, after Trump reverted back to a free-trade agreement that he installed in his first term.
Levies of 25% have also started on many imported cars, and similar ones are planned on car parts in early May.
Other sector tariffs include duties of 25% on steel and aluminum imports.
What are U.S. tariffs and who pays them?
Tariffs are import duties on goods coming into the U.S., so American companies and other businesses buying directly from foreign suppliers will pick up the initial tab. Who bears the ultimate burden evolves, however, as businesses in the supply chain factor in new prices and their own demand.
Importers wanting to limit the hit from tariffs can raise their prices, effectively passing along the tariff burden to American consumers and other businesses. But pain can be felt in the other direction too as American importers may decrease orders for newly tariffed imports that they can no longer afford.
How will the tariffs affect U.S.-China trade?
The tariffs together threaten an estimated $582 billion in trade between the world's two largest economies. The U.S. exported $143.5 billion in goods to China in 2024, while $438.9 billion worth of goods went in the other direction.
Smartphones, toys and industrial parts are among the variety of products America imports from China, while goods the U.S. sells include soybeans, electronics, and oil. The U.S.'s third largest export market was China, while 13% of American imports came from China.
Some trade is grinding to a halt already as U.S. factories cancel orders and some Chinese manufacturers put workers on temporary leave. Economists say the two countries are headed for a messy economic decoupling.
Why is Trump using tariffs?
Trump has recently said tariffs are needed to the U.S.'s trade imbalances with other nations and avoided explaining what exactly countries can do to avoid getting hit. He said Monday there "can be permanent tariffs" and there can "also be negotiations." He also dismissed a proposal by the European Union to offer "zero-for-zero" tariffs on industrial goods.
Trump's administration has offered little clarity. "This is not a negotiation," wrote Peter Navarro, his top trade adviser, in a Financial Times opinion column. "For the U.S., it is a national emergency triggered by trade deficits caused by a rigged system."
During his presidential campaign, Trump used tariffs to rally swaths of his political base.
Trump has said tariffs will help protect American businesses, move manufacturing to the U.S. and create jobs for American workers. He has also argued that tariffs would help narrow the U.S. trade deficit -- the gap between how much the country imports and exports.
Trump has previously turned to tariffs to extract political concessions from U.S. trading partners. After his threats to impose tariffs on Canada and Mexico earlier this year, both countries pledged to step up border-control efforts to curb migration and illegal drug flow into the U.S.
Many economists have been critical of Trump's use of tariffs, warning that they are too blunt a tool for protecting the U.S. economy and addressing trade imbalances. Some argue that tariffs aren't a good negotiating tool, especially when it isn't clear what Trump wants in exchange.
How might tariffs affect American consumers and businesses?
Tariffs, and Trump's unpredictable decision-making on them, have triggered worries for many investors over higher inflation and a U.S. economic recession.
Some Americans, concerned that prices will go up, have begun loading up on goods. They have bought vinegar, tires, furniture, TVs, and Lululemon clothes.
Firms relying on imported goods stand to get hurt first. Some of them say they are already passing on higher costs to consumers in the form of higher prices.
A few businesses have promised to invest more in the U.S., although most economists doubt that tariffs will bring a meaningful revival of U.S. manufacturing. Most big multinationals have been reluctant to move entire supply chains as they assess whether the tariffs will be permanent.
Trump has signalled that he will continue to use tariffs, including for the pharmaceutical sector.
That message has gotten to Swiss drug giant Novartis, which said on April 10 that it will spend $23 billion over the next five years to establish a research hub in San Diego and expand three U.S. plants and build six new ones. The investment will create roughly 1,000 new jobs at the firm.
This explanatory article may be periodically updated.
Write to Chao Deng at chao.deng@wsj.com
(END) Dow Jones Newswires
April 11, 2025 13:50 ET (17:50 GMT)
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