Tariff Implementation: Why Were They Implemented, and How Does This Affect Consumers?

Tariffs have played an important role in US history. The first major US tariffs were implemented in 1789 under the Tariff Act of 1789. This was the first major legislation passed by the US Congress, and its purpose was to raise revenue to pay the revolutionary war debts. Tariffs were crucial to the government, as they accounted for around 90% of federal revenue at the time. Then in 1861, the Moriff tariff was passed under President Buchanan. It aimed to protect new industries and further increase government revenue. Many years later, in 1930, the Smoot-Hawley Tariff was enacted, raising tariffs on more than 20,000 imported goods. At the time, the United States was experiencing the Great Depression, and the tariff was intended to protect American farmers and industries from foreign competition. Similarly, modern tariffs have been introduced to protect American businesses.

Recent increases in tariffs are expected to have a significant impact on the average household. As of right now, an average household spends about $1000 more per year as a result of Treasury Secretary Scott Bessent increasing the global tariff rate to 15% this week. This is a 5% increase from the 10% tariff that was implemented last year. Now, why were the tariffs imposed, and what effect do they have? Trump first introduced tariffs on Chinese goods in 2018, in order to reduce the US trade deficit, protect domestic manufacturers, and punish foreign nations for unfair trade practices. However, these tariffs in 2018 led to trade conflict with countries like China, Canada, and other European nations, who responded by imposing their own tariffs on the US. This resulted in a trade war that increased the cost of many imported products by around 10-30%. As a result, many manufacturers faced a higher cost for raw materials that were imported from other countries. These increased production costs created economic uncertainty and new challenges for businesses.

In 2025, Trump raised the baseline tariffs from 2.5% to 10% for many countries. This led to a sharp increase in the standard of living for many Americans. All of these tariffs again sparked a trade war, but this time with Canada and Mexico, who were two of the largest US trading partners. This situation is still highly volatile, with both Canada and Mexico trying to negotiate within the US-Mexico-Canada agreement. The USMCA protected labor rights for citizens in North America while still encouraging trade between the countries. This also caused strong economic ties between the three countries and created one of the biggest trading partnerships in the world. Tariffs had a significant economic effect in 2025. The unemployment rates rose by around 0.3 to 0.4%, representing an estimated 7.2 to 7.6 million people. Additionally, it drove inflation by around 1% higher than the average annual rate, further increasing the cost of living for many families. Although some economists state that this effect is temporary, many experts suggest that the price level would be high even after the effects of the tariffs decline.