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Import-extort: what to make of Donald Trump’s titanic tariffs

Donald Trump, Mike Bird, Ethan Wu, Simon Rabinovitch, Douglas Irwin, Doug Irwin

On April 2, 2025, President Donald Trump invoked national emergency powers to impose a baseline 10% tariff on all imports alongside reciprocal rates targeting nations like China and the European Union, effectively raising the U.S. tariff level to approximately 25%. This unilateral executive action, which exempts Mexico and Canada while closing the de minimis e-commerce loophole, aims to restore domestic manufacturing but faces imminent legal challenges under the International Emergency Economic Powers Act. Economic analysts warn the policy could trigger stagflation with inflation reaching 5% and reduce GDP by 0.6%, yet global markets have initially reacted with falling bond yields despite alarm from oil, gas, and apparel sectors reliant on imported inputs.